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alstry (35.42)

Actual U.S. Unemployment: 15.8%...a little low but getting closer

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May 09, 2009 – Comments (3)

http://voices.washingtonpost.com/economy-watch/2009/05/actual_us_unemployment_158.html

This morning's news that U.S. unemployment has hit 13.7 million, pushing the rate to 8.9 percent, tells only half the story of this recession.

The total number of Americans who are not working full-time but ought to be is actually about 22 million, or 15.8 percent, according to the Bureau of Labor Statistics.

Who are those other 8.3 million Americans? Call them the unofficially unemployed.

As The Ticker points out each time the Bureau releases the monthly unemployment figure, it does not include many out-of-work Americans.

There are many reasons for this.

The bureau, which is under the Labor Department, cannot use unemployment compensation records to count the out-of-work, because they are not reliable or up-to-date enough. The bureau also cannot count every out-of-work person.

Instead, as The Ticker reported here in December: "In the case of the monthly jobs report, the Labor Department contacts 60,000 households to determine the unemployment picture for the entire workforce, which consists of about 154 million Americans."

The problem with this methodology is that it does not include millions of Americans who are not working full-time who ought to be. Those, in the bureau's words, who are "marginally attached to the labor force."

Those numbered an additional 2.1 million Americans in the first quarter of this year, the bureau said. Alarmingly, that number was up 35 percent from the first quarter of 2008.

Of this number, the bureau categorized 717,000 as "discouraged" workers, or those that have simply given up looking for work for any number of reasons. That number was up 70 percent from the first quarter of 2008.

"Discouraged" workers include a disproportionate number of young people, blacks, Hispanics and men, the bureau said.

On top of all of this, add an additional 3.6 million unemployed Americans who say they want a job but have not looked for work in the past 12 months.

The remaining 2.6 million or so officially unemployed Americans include part-time workers who would prefer to have full-time jobs, those who have not looked for work because of illness or transportation reasons and those who believe they have other impediments.

But even though these workers don't count toward the official monthly unemployment number, they are nevertheless a true weight on the economy.

They don't pay payroll tax, or as much of it as they would; they don't contribute to Social Security or other government entitlement entitlements and they don't spend as much.

The 15.8 percent figure is the highest since the bureau began keeping these figures in 1994. Excluding the current recession, the highest previous rate came in January 1994, when it hit 11.8 percent.

The number was 8.7 percent in December 2007, when the current recession began. That means the number of the unofficially unemployed has shot up 7.1 percentage points since then.

By comparison, the official unemployment rate has risen 3.9 percentage points since December 2007. This suggests that a greater percentage of people are becoming disenfranchised from the workforce than are getting laid off.

By the way, in February, the White House predicted unemployment would top out at 8.1 percent this year, a figure that was blown through the following month.

It has made no call on how high the unofficial unemployment rate will go.

 

WHAT CAN ALSTRY SAY BUT THE WASHINGTON POST IS CATCHING ON TO ALSTRYNOMICS.

3 Comments – Post Your Own

#1) On May 09, 2009 at 11:37 PM, mliu01 (< 20) wrote:

this country has given liars and criminal pass after pass. It is over. No country will be prosperous doing shit like this.

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#2) On May 10, 2009 at 1:04 AM, usmilitiadude (31.60) wrote:

Does the Department of Labor call the Amish to see if they're working? I don't think so.

S&P 500 - As Rpt EPS for 12 Mo Sep,'09 estimated to be negative ($-1.83 EPS) - first time in index history 

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#3) On May 10, 2009 at 1:24 AM, alstry (35.42) wrote:

First,

Alstry would like to thank ALL caps players for their input on the employment discussions.  It is one of the most important issues facing our economy as we are a leveraged consumer based economy and without incomes, many families would not be able to ecnomically sustain themselves for a protracted period of time.

Second,

I intentionally focus on UNemployment because it is generally a quantifiable and defined topic....however, equally as relevant is the effect of dramtic declines in income and the economic effect on families even if there is no job loss.

These people are NEVER counted in the employment statistics and rarely discussed in the mainstream media.

But if you just think about it....there are millions of families, maybe tens of millions of families that have sustained material declines in income even though they still may be employed.

Easy examples would be airline pilots, construction workers, real estate agents, mortgage brokers, waitstaff, architects, lawyers, salespeople...etc.....

Now imagine if you had a large drop in income and your property taxes increased, or mortgage rate reset, or your health insurance premium went up, or gas prices increased, or any combination of the above.........

You might not be able to service your monthly payments and the outcome would likely be not much different than if you lost your job completely.

Few talk about this subject right now...but my guess is as the summer moves forward..it will become an increasingly important issue across the nation.

 

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