What is the real unemployment rate???? 4%, 9% or 16%?????
In order to determine we have to understand how the fugures are defined.
NOTE: I am applying the Not Seasonally Adjusted numbers from the below linked graph.
The statistics are found here as released by the Department of Labor:
The first line is U1 reported at 4.1% and defined as:
Persons unemployed 15 weeks or longer, as a percent of the civilian labor force.........
The third line and most popularly quoted is U3 reported at 9% and defined as:
Total unemployed, as a percent of the civilian labor force (official unemployment rate)....
THUS, JUST USING THE ABOVE TWO TABLES....IT APPEARS THAT 4.9% OF THE LABOR FORCE HAS BEEN UNEMPLOYED FOR LESS THAN 15 WEEKS. WITH A LABOR FORCE OF APPROXIMATELY 150 MILLION PEOPLE...........AT LEAST 7.5 MILLION PEOPLE HAVE BECOME UNEMPLOYED IN THE PAST 15 WEEKS.
And there is the figure adopted by Alstry and those that practice Alstrynomics on the sixth line reported as U6 at 16.2% and defined as:
Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers...
Immediately below on the chart the following NOTE is provided:
Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are thosewho want and are available for full-time work but have had to settle for a part-time schedule.
In other words, U6 includes those unemployed so long that they no longer qualify for unemployment benefits but want a job and those forced to work part time but want to work full time.
For Alstry, you are either employed or unemployed. Just because you have been unemployed for over 26 weeks doesn't make you something else......you are still unemployed and should be counted as unemployed. Further, if you want to work full time but can only get part time work....for most Americans....the income received from part time employment is not sufficient to maintain a basic standard of living and thus Alstrynomics classifies those people as functionally unemployed.
Prior to the Clinton Administration....a definition closer to U6 was the commonly reported unemployment figure.......
I konw, many of you wish the unemployment rates were only 4 or 9%..........but in reality, we have one of the highest unemployment rates in the industrialized world exceeding 16%.
NOW YOU KNOW THE REST OF THE STORY......
Is understanding how unemployment is calculated and reported important? I will that answer up to you guys who are people congregating in an investment website.....and potentially in the crosshairs of the next person to join the above statistics.