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Eli Lehrer

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Is The Real Unemployment Rate 40 Percent?

Posted: 07/06/2012 5:21 pm

It all depends on who is in office: when George W. Bush oversaw an economic recovery as president, liberals pointed to alternative unemployment numbers to cast doubt on his economic policies. Now that a liberal president sits in the White House conservative news sites, bloggers and think tanks point to the broader U-6 unemployment rate (which stands at 14.9 percent) and the discouraging numbers released yesterday to show that President Obama's economic policies aren't working.

Although I agree with almost all conservative critiques of President Obama's policies, there's also a good case that the widely reported 8.2 percent unemployment rate (the U-3 as its keepers at the Bureau of Labor Statistics call it), is a pretty accurate yardstick for the state of working America.

To begin with, measuring "unemployment" is hard. Currently, only about 60 percent of all people over 18 hold jobs. By this measure -- the broadest one possible -- the "real" unemployment rate is 40 percent. But it's ridiculous to think that. Most people who don't work are in school, staying home to raise children, or retired. Thus, government statisticians have the difficult task of trying to measure people who want to work but can't find anything.

And this requires some judgment calls. In fact, only a little more than half of those counted as "unemployed" actually lost a job anytime in the recent past and now want another one. This is measured by the U-2 unemployment rate that currently stands at 4.6 percent. (Down .5 of one percent in the past year). The other 45 percent of the 8.2 percent of the "unemployed" workforce consists of people who, for one reason, or another didn't have a job in the recent past but want one now. While it's certainly desirable for all of these people to find work, not all of them meet conventional images of unemployment. For example, the widely reported unemployment rate includes full-time students seeking part-time work and people who have never held a job of any sort and are looking for one.

Many other categories of "unemployment" tracked by the government and included in the broadest measures of unemployment stretch the definition of "unemployed" even further. For example, while part time workers who want a current employer will give them more hours but aren't making an effort to find another job face a difficult situation, they aren't really "unemployed" even if they get counted in the U-6. And much-discussed "discouraged workers" who have stopped looking for work comprise only half of one percent of the total labor force. (And, since becoming "discouraged" typically results in the loss of unemployment benefits, many people who fall into this category actually have other sources of income and may not have had a major economic need to work in the first place.)

On the other hand, some individuals left out of even the broadest current definitions of "unemployment" would still prefer to work. For example, 65 year olds who lose their jobs may decide to "retire" even though they would have happily considered working in the same job for years. Some people receiving government support payments for disabilities, likewise, would probably return to work if given the proper opportunities and incentives.

In the end, a great deal of the unemployment picture depends on exactly how one counts. The current measures of unemployment, while far from perfect, are a good enough way to determine the state of the labor market. They aren't kind to the White House's current occupant. But the "real" unemployment rate is, indeed, 8.2 percent.

 

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08:26 PM on 07/31/2012
15%
03:09 PM on 07/27/2012
so if you used to be a materials engineer and you are now flipping burgers, it's okay, because you are not unemployed! and if you are a 20-something who has never HAD a job because there aren't any you can get to, it's okay, you're not unemployed! If you're in school full-time and can't get a part-time job so you can eat too, it's okay, you're not unemployed!
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Aesops
Appearances often are deceiving
09:26 PM on 07/09/2012
What tripe! If you actually go through the math, the number people excluded from the unemployment statistics have grown substantially since 2008. Is the point that inclusions and exlusions offset eachother to some level correct? Yes, but the fact remains that the unemployment rate in the US is far over 8.2% today. It is just incorrect even when the author's arguments are taken into account.

This has nothing to do with politics and everything to do with reality.
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Independents Rule
If it ain't broke, fix it till it is !
01:45 PM on 07/09/2012
17.3% is really the closest real number of unemployed.
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TaiJi2
11:55 AM on 07/09/2012
What a disgracefully inept way to measure the employment picture. The government has obviously never been interested in the productivity of its citizens and nothing reveals it better than the way it "reports" the situation. What they do report is just a wedging tool of the partisan establishment to manipulate public perception and free them to serve their donors their slice of the American pie.
the pariah
Author of "The Lean Pocket Diet"
09:58 AM on 07/09/2012
These statistics along with Obama's job creation statistics are all unreliable, twisted and shaped. The only thing the President and Congress should be doing now is focusing on ways to get employers to feel comfortable about expanding their work force and feeling like there will be increased demand for their products.
09:52 AM on 07/09/2012
Any citizen is a fool to think unemployment in the USA is less than 20%. Manufacturing companies were the big employers and they have all moved offshore and it was brought on by politicians. They must think the voters are dumber than they are,if that is possible. On top of that Pres Obama thinks the Fed Gov can keep supporting all the lazy physical able people so he keeps the Mexicans here for the jobs they should be doing. What a joke.
10:41 PM on 08/19/2012
The good news is, the Mexicans and even Chinese immigrants are seeing what you are saying and siezing opportunities. In ten years there will be new Americans and they might be wlling to bring industries back.

the fact is, white people just don't want to work. Thats why it was so easy to pull off NAFTA WTO etc
04:45 AM on 07/09/2012
Obama=Fail
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irishinohio
recovering alcocatholic
11:11 PM on 07/08/2012
The Eurozone, China, India, Japan.....all declining...and why?...Countries are People my friend, not Coprorations, and sooner or later, workers across the World will unite, and take back their Rights..... and the Power hungry Romoney Politicians, will have nothing left, and the workers will have power and control, divided equally in true Democracy.

The unemployed are not the ones to blame........those Mythical Creatures, the "Job Creators".......are the ones not creating jobs, because in a recession, you learn how to extract more from a smaller workforce...so no need to hire more workers.....
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Independents Rule
If it ain't broke, fix it till it is !
01:48 PM on 07/09/2012
so who is going to employ everyone in your world?
Hidare
Let me help you out. Which way did you come in?
08:16 PM on 07/08/2012
In 2010 17 states elected Republican governors since then all 17 states have reduced their unemployment rate by 1.38% each. Democratic led states have zero change or have increased. The blue state agenda does not work anymore or the liberal philosophy. Spare me the lazy link? comments and google it.
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irishinohio
recovering alcocatholic
10:57 PM on 07/08/2012
and spare the lazy ink....!
02:44 AM on 07/09/2012
Your stats are wrong. Only two states had an increase (NY and NJ) and Hawaii remained flat at 6.3. So the numbers show it is a national trend, not a state by state trend.

Since you were to lazy to provide anything but a statement with nothing to back it up, here are the stats and link for Jan 2011 (when those 17 governors you mention took office) through May 2012 (last month posted on the site). I provided the data for states with Democratic governors to disprove your statement that they were all zero change or an increase. Either your source is wrong or you are lying. I know how conservatives prefer repeating falsehoods rather than researching facts.

Jan 2011 - May 2012 (Democratic Governors)

Arkansas 7.8 - 7.3
California 12.4 - 10.8
Colorado 9.1 - 8.1
Conn 9.0 - 7.8
Delaware 8.5 - 6.8
Hawaii 6.3 - 6.3
Illiinois 9.0 - 8.6
Kentucky 10.4 - 8.2
Maryland 7.2 - 6.8
Mass. 8.3 - 6.0
Minnesota 6.7 - 5.6
Missouri 9.6 - 7.3
Montanna 7.5 - 6.3
NH 5.6 - 5.0
NY 8.3 - 8.6
NC 9.9 - 9.4
Oregon 10.4 - 8.4
Vermont 5.7 - 4.6
Washington 9.1 - 8.3
West Va 9.6 - 6.9


As for Republican governors

NJ went up from 9.1 to 9.2, the rest saw a decrease.



http://www.ncsl.org/issues-research/labor/2012-state-unemployment-rates.aspx
05:46 PM on 07/08/2012
I have been hearing forever 50 yrs you have to work hard to get ahead. Wrong, you have to work smart to get ahead.
The politicans just want people to accept low wage jobs because they along with the corporationd and banks caused economic collapse.
People will beg in the streets before they go into debt to help the elite. I see more and more of this everyday.
I take the few dollars I would spend on a discount item at a store and give it to a begger. Could care less what he does with the money.
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Robert SF
05:10 PM on 07/08/2012
This is nothing but spin. The U3 measure is statistically valid, but it doesn't measure "real" unemployment. The truth is there are fewer people working today than before this Great Whatever, and they're earning less money than before. The drop in unemployment from 10% to 8% has been accomplished largely by the usual trick of not counting certain unemployed people.

If you combine the unemployment rate and the labor force participation rate, you include "everyone" without including students, prisoners, people in the military, etc., who shouldn't be included. Then you see that it's been a flat line for the past 30 months. If you look at it long term, you see it's not been like this before. Before, things got bad and then recovered quickly, but not this time.

http://imageshack.us/photo/my-images/502/elfshort.gif
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08:36 PM on 07/08/2012
They call this the great Recession for a reason. Put into your calculations additional jobs sent overseas, issuing H1B visas in a time of high unemployment, increase productivity, and dwindling consumer demand, it is no surprise that the recovery when it comes to jobs has not moved much -- hardly all Obama's fault.
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Robert SF
03:29 AM on 07/09/2012
I've often said that politicians are not in charge of the economy but at its mercy. It's not Obama's fault, but he will pay the price for it anyway.
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Scott Leland
10:57 AM on 07/09/2012
dickdudda: Yes, you are right, plus the government allows 1,000,000 more legal immigrants to our country every year, all of whom have to have jobs lined-up. That is one million more jobs Americans cannot apply-for:

http://redwriteblue.blog.com/2012/07/05/a-tale-of-two-companies/
02:52 AM on 07/09/2012
You can debate about 'real' unemployment. All the different measures look at it in their own way. However you have to compare apples to apples when looking at different years, compare U3 to U3 and U6 to U6, etc.

Another thing to remember is that now that the baby boom generation starts to retire, we will see a reduction in the workforce since they are the larges generational group. Of course that largely depends on how long they decide to stay in the workforce as full retirement ages for pensions and SS have been increased.
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Robert SF
02:34 PM on 07/09/2012
Those retirements are only clouding the picture. I know someone who "retired" just this year at 62. She lost her good job a few years ago, and just never managed to find another one of that caliber. After several years of various self-employment gigs that didn't pan out (mostly sales) and minimum wage part time jobs, she exhausted her 401k and her savings and had to file for Social Security. Of course, she's getting less than she could if she had held out until 70, but she was facing the streets. And it turned out that her Social Security is only $750, so she's still scrounging and doing anything from dog walking to house sitting. This "retirement" thing is not good for America.
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Hellas32
05:00 PM on 07/08/2012
"Although I agree with almost all conservative critiques of President Obama's policies"
Really, well, I'll tell you what. When we actually try some of Obama's economic policies, you let me know. The Teapublicans seem obsessed with stalling everything unless it relates to regulating girly parts, or screwing the poor. Or, is that your actual problem with Obama's economic policies. We haven't screwed over the poor enough for you to benefit the 1%? The economy is stalled, because the people who actually to all of the real purchasing are either unemployed or recovering from the financial disaster caused by the 1%'s greed.
02:15 PM on 07/27/2012
You mean policy like the Chinese building the road in Texas or building, repairing bridges in California. I am a Democrat and I do not see any policy to stimulate anything other than cronie payback
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Social Construct
Go left, young man.
03:48 PM on 07/08/2012
The author states that measuring unemployment is hard, suggesting that inaccuracy is inherent in the statistics, then goes on to qualify the statistics given by some questionable anecdotal rationalizing. The only thing hard about measuring unemployment is that, like just about everything else in government accountability, the people interested in doing the job are smothered by the political sensationalizing from both too big to fail parties.
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Gestas
Mountain Man
02:42 PM on 07/08/2012
This is easy..for several generations we've been telling our kids, that if they don't spend a lot of money and time going to college they will have to work the rest of thier lives.. You know WORK...the thing these people are too over-qualified to do...