Free Markets, Free People


Hiding The Decline: What Is The Real Unemployment Rate?

Most likely it is much more than what is officially acknowledged.

That’s because it’s all about how you count them. Right now, for instance, the official unemployment number is 10%. If you add the underemployed, though – people working part time who want full time jobs – that number jumps to 17.3%

But is the 10% number right? Most likely not. Don Surber points to one reason:

Crudele explained: “When the Labor Department puts out the January employment figures on Feb. 4, they will include an assumption that a lot of companies went out of business.

“This is something called the birth/death model that is used by the department. Last year it caused 356,000 jobs to be subtracted from the January job count… Nobody in the media will pick up on this, but the Labor Department will also do something called a benchmark revision on Feb. 4 that will subtract around 840,000 jobs that the government thought existed, but really don’t.”

356,000 jobs here, 840,000 jobs there and pretty soon you have 1,196,000 more unemployed than advertised.

Oops.

That would change that 10.0% to 10.8%.

“Oops” indeed. I have an inherent distrust of estimates based on models. Maybe it’s the AGW nonsense that has turned me so against them. But still, how many “benchmark revisions” have been done in this recession and how many jobs have been shuffled off to the “do not exist anymore” bin without being added to the unemployment rate? In reality, we could easily be in the 13 or 14% area.

The Atlanta Business Chronicle had a short blurb today that gives you insight into the real size of the unemployment problem:

There are 6.4 job seekers for every job opening in the U.S., according to data released Tuesday by the U.S. Bureau of Labor Statistics. That’s the highest rate since BLS began tracking such data in December 2000.

The ratio in December 2007? 1.7 to 1.

~McQ

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8 Responses to Hiding The Decline: What Is The Real Unemployment Rate?

  • As of the other day the White House announced they’re changing how they count their jobs saved or created.  Now if they spend stimulus money, it doesn’t matter if it was paying for a job already in place, or creating one.

    So, you trust them to give you the real scoop on the unemployment numbers (rhetorical I know)?   They’re ‘protecting’ us by lying you know, just ask them.  It’s not because they’re trying to cover their sorry asses, and trying to cover  that they don’t really know what the hell they’re doing (“we will spend our way out of depression! “), nope, they’re lying to us to keep our moral up.  Yeah, that’s the ticket.

  • Track the “official” numbers here

  • I believe that the administration should refer to all the jobs that haven’t been lost as jobs that were ‘saved’.
     

  • The Obama economy sure is chugging along…

  • Unemployment, both in the U.S. and the world as a whole, marches ever higher because the field of economics doesn’t account for the relationship between population density and per capita consumption.
    Following the beating the field of economics took over the seeming failure of Malthus’ theory, economists adamantly refuse to ever again consider the effects of population growth. If they did, they might come to understand that once an optimum population density is breached, further over-crowding begins to erode per capita consumption and, consequently, per capita employment.
    And these effects of an excessive population density are actually imported when a nation like the U.S. attempts to trade freely with other nations much more densely populated – nations like China, Japan, Germany, Korea and a host of others. The result is an automatic trade deficit and loss of jobs – tantamount to economic suicide.
    Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!
    If you‘re interested in learning more about this important new economic theory, then I invite you to visit my web site at http://PeteMurphy.wordpress.com.
    Pete Murphy
    Author, “Five Short Blasts”

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