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What Is the Real Unemployment Rate?

It's far higher than the official 7.3 percent.

by
Tom Blumer

Bio

November 12, 2013 - 10:39 pm
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Just beneath the surface, the government’s latest employment report shows how much damage the POR (Pelosi-Obama-Reid) economy, now well into its sixth year, has done to the country’s economic fabric. The impact of Obamacare, if it isn’t stopped, will only compound it.

Even the relatively decent news in Uncle Sam’s October report was suspect.

Employers are said to have added 204,000 seasonally adjusted jobs. But as the Associated Press noted, the government, thanks to the 17 percent government shutdown, had an extra week to retrieve its surveys from employers, and therefore had a higher than usual response rate. It doesn’t seem as if this should matter, but apparently the Bureau of Labor Statistics has a history of estimating high in its initial releases when it has more time to collect and assemble the data. Additionally, economist Mark Zandi believes that “businesses may have inadvertently counted employment for an extra week.”

Even more questionable are the BLS’s revisions to August and September. As seen below, the raw (i.e., not seasonally adjusted) figures show no revised net improvement during those two months. But that goose egg somehow turned into 60,000 additional jobs during seasonal conversion:

blumer_graphic_11-11-13-1

Then there’s the unemployment rate. Even though it ticked up to 7.3 percent, that was also supposedly good news, because it would have dropped if it weren’t for the 850,000 federal government workers furloughed during part or all of the partial shutdown and treated as unemployed.

The real problem, thanks to the POR economy’s progenitors and the Obamanomics policies which have accompanied it since January 2009, is that the official unemployment rate is more unreflective of true job market conditions than it has ever been.

During Republican and conservative presidential administrations, those on the left, particularly in organized labor, often complained bitterly that the official unemployment rate fails to count discouraged workers and those who are working part-time for economic reasons. For some reason — I wonder why? — they’re incredibly quiet these days, even though their complaint, as we will see, is far more valid.

In August 1982, AFL-CIO head Lane Kirkland contended that the previous month’s official 9.8 percent unemployment rate, so adjusted, would have been 13.6 percent, or 3.8 points higher. That’s interesting, because October 2013′s seasonally adjusted “U-6″ unemployment rate, after I adjusted the official 13.8 percent down by 0.2 points to account for those furloughed government workers, was that very same 13.6 percent, even though the official 7.3 percent “U-3″ unemployment rate was 2.5 points lower than it was at the time of Kirkland’s complaint.

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Top Rated Comments   
Anyone who looks coldly at the present reality knows full well that there ain't no recovery, there ain't gonna be no recovery, and that it never was intended that there be any such thing as a recovery. we have got to look at the Coolidge approach and get government out of the way. Government policy is choking our economy when it isn't distorting it completely. This has been going on for decades, the better part of a full century. Not only is this an economic disaster, it is also cultural, societal, educational. It is profoundly moral and ethical. It is long past time for us to screw our heads on properly, starting at the top. A fish does rot from the head.
45 weeks ago
45 weeks ago Link To Comment
Do they account for people that are employed full time but who had to take massive pay cuts, such as from $70K to $44K?
45 weeks ago
45 weeks ago Link To Comment
I just offered an entry-level Civil Engineer, with no experience with AutoCAD or design, $17.50/hour with overtime paid at $26.25, and he countered offered at $23 because that's what some website stated he should start at. That's great if the market can bare it in this economy where NO ENGINEER FIRMS ARE HIRING ENTRY-LEVEL ENGINEERS! I found there were only 10 jobs on career builder over the ENTIRE COUNTRY, and some stated that they had to have a minimum of 2 years experience for an "Entry Level" job! Others stated they would pay $12/hour. So, I thought I had a pretty fair offer, which also stated I would move his pay up after he learned the basic minimum skills. He would rather go back home with his parents than take an opportunity to get his foot in the door somewhere, just so he can be able to get a job anywhere! Parents are being far too enabling! If I was made that offer, my Dad would have said you better take it because you are not going to stay home! We are living in an "Entitlement" era now, and until our government stops enabling these people to not work then the economy will never recover.
45 weeks ago
45 weeks ago Link To Comment
All Comments   (29)
All Comments   (29)
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The unemployment situation is worse that what Blumer describes above. The federal government does not consider the following people to be unemployed:

A high school or college grad who has never worked. (No work history means no eligibility for unemployment means not counted as unemployed.)

A person who left the workplace (such as a new mother) and wants to return after a year or more. (No recent work means no eligibility...)

A person who burned through unemployment benefits and still cannot find work.

A person working part-time who is trying to find a full-time job.

The Obama administration claims an unemployment rate of 7.3%. The actual unemployment rate is twice that. (As calculated by the U.S. Debt Clock Organization using government data.)
45 weeks ago
45 weeks ago Link To Comment
Anyone who looks coldly at the present reality knows full well that there ain't no recovery, there ain't gonna be no recovery, and that it never was intended that there be any such thing as a recovery. we have got to look at the Coolidge approach and get government out of the way. Government policy is choking our economy when it isn't distorting it completely. This has been going on for decades, the better part of a full century. Not only is this an economic disaster, it is also cultural, societal, educational. It is profoundly moral and ethical. It is long past time for us to screw our heads on properly, starting at the top. A fish does rot from the head.
45 weeks ago
45 weeks ago Link To Comment
I had my own business at one time. I wouldn't do it today. Government at all three levels interferes too much. Taxes too much. Obamacare requires a very expensive level of insurance. Due to the requirement of "no limits on coverage", insurance companies to protect themselves have had to raise rates while at the same time face greater risks. This is "not" a receipe for success!
45 weeks ago
45 weeks ago Link To Comment
and in an april report there were 89,000,000+ people not working in this country and just this month the report was that there are now more than 91,500,000 not working. So while libs/media and B.O. are telling us the fairy tale of an economy doing well, these reports show that more than 2,000,000 fell out of the labor pool.
45 weeks ago
45 weeks ago Link To Comment
Our health care costs are far higher than they would be if we had a true free market in health care. In a true free market, the government has virtually no role to play except to prevent fraud. In a true free market there are no prescription laws. Doctors do not have a legal monopoly enforced by the power of government over access to medical drugs. Health care is delivered by the most economical means possible. Ordinary medical expensives are paid for either "out of pocket" or drawn from health savings accounts using pre-tax income. There are alternatives to health insurance in the form of low interest long term "repayment" plans for more major medical services. Health care providers exist on a "tier" basis where people are free to pick and choose the level of skill needed. Hospitals only charge for services actually used. Health care costs are no more than 10% of GNP, and likely less. The legal profession kept on a "tight rein" is no longer allowed to create its own laws as it does now. Thus malpractice is virtually unknown, much as it is today in the rest of the world. This is far different from the "monopoly medicine" we have today.
45 weeks ago
45 weeks ago Link To Comment
Do they account for people that are employed full time but who had to take massive pay cuts, such as from $70K to $44K?
45 weeks ago
45 weeks ago Link To Comment
Another good question is "What's the REAL inflation rate?" Not the rate the government is reporting, and using to short change seniors on the annual COL increases.
45 weeks ago
45 weeks ago Link To Comment
Going by the prices I see in the supermarket, our rate of inflation must be about 5% a year or more. When I started working in 1959, I paid 10 cents for the same candy bar that now sells for a dollar. A bottle of "Coke" was a dime.
45 weeks ago
45 weeks ago Link To Comment
Where do you get a candy bar for as little as a dollar? They are $1.19 at least here in the Seattle area.
45 weeks ago
45 weeks ago Link To Comment
Same thing here, friend. Every morning, on the way to work, I stop and buy a daily newspaper and every day, from the first time it happened, I get the gut feeling that there's something fundamentally wrong when the daily paper costs one dollar.
45 weeks ago
45 weeks ago Link To Comment
https://www.aier.org/epi (Everyday Price Index) - this is what things cost if you're not buying cars, houses, or electronic toys every month.
45 weeks ago
45 weeks ago Link To Comment
"Add to all of this the fact that millions of workers are, out of necessity, in jobs for which they are overqualified. Half of all college graduates are working jobs which do not require a college degree. Even if you subtract out those who are exactly where they want to be by choice, that’s a staggering figure. The “underemployment rate,” if you will, is surely well above 20 percent. Yet we continue to churn out college grads, pretty much ensuring that this dangerously wasteful trend will continue, even as household incomes continue to stagnate."

Thus, you have the same situation as you had with the de-mobilization of American servicemen after WWII -- how do you handle 10+ million new souls that are returning to the economy? What do you do with them while the economy ramps up? Answer: you send a bunch of them to school so as to provide the college grads necessary for the anticipated growth of the post-war economy.

Only now, no one is expecting the economy to grow because of the economic disincentives that businesses have to expand their business. Socialism is like that. So what happens when all of these college grads get out in the world? Exactly what's happening now. We're not going to be "growing our way out" of this economic morass by simply supplying the overqualified workers -- but the technocratic class doesn't/won't understand it.

I won't even get into the fact that the increase in the number of foodstamp recipients is tantamount to moving the lines for the soup kitchen indoors...
45 weeks ago
45 weeks ago Link To Comment
Tom Blumer, Thank you for trying to find the real life unemployment numbers. I personally think it is very close to 20%.
45 weeks ago
45 weeks ago Link To Comment
I just offered an entry-level Civil Engineer, with no experience with AutoCAD or design, $17.50/hour with overtime paid at $26.25, and he countered offered at $23 because that's what some website stated he should start at. That's great if the market can bare it in this economy where NO ENGINEER FIRMS ARE HIRING ENTRY-LEVEL ENGINEERS! I found there were only 10 jobs on career builder over the ENTIRE COUNTRY, and some stated that they had to have a minimum of 2 years experience for an "Entry Level" job! Others stated they would pay $12/hour. So, I thought I had a pretty fair offer, which also stated I would move his pay up after he learned the basic minimum skills. He would rather go back home with his parents than take an opportunity to get his foot in the door somewhere, just so he can be able to get a job anywhere! Parents are being far too enabling! If I was made that offer, my Dad would have said you better take it because you are not going to stay home! We are living in an "Entitlement" era now, and until our government stops enabling these people to not work then the economy will never recover.
45 weeks ago
45 weeks ago Link To Comment
When the "rate my professors" website is run by a "music" network that lionizes a (c)rap "artist" who mumbles into a microphone about being so bad he can s... his own d..., that says much you need to know about the state of higher diploma-milling, er, "education" today. And about the products it turns out.
43 weeks ago
43 weeks ago Link To Comment
The proper response to his negotiating position is to drop your offer by $2/hr. When he protests, drop it another $2/hr. He'll protest again, then tell him you are now are not going to hire him, after all.

Of course, you should never hire anyone that ignorant, anyway. The negotiating is just to see him squirm.
45 weeks ago
45 weeks ago Link To Comment
Entry-level mook with NO experience AND needing software training/ babysitting and he is TRYING to dictate his pay via some website? In this flatlining-like employment prospects?

I think that person told you enough of his 'prowess' and ahem, 'work ethic'. Jmo..
45 weeks ago
45 weeks ago Link To Comment
I don't get it, how can he BE even an entry-level civil engineer without some kind of CAD experience? Or on the other side, why don't you hire some other newbie who does have that experience?
45 weeks ago
45 weeks ago Link To Comment
Most engineers only have 1 semester of AutoCAD, and that's it. The class only teaches lines and dimensioning, and all mechanical drawings that have no bearing to the type of things that they must utilize for Civil drawings. It only takes a couple months for entry-level engineers to pick it up, but as soon as they gain that knowledge they can pretty much find a job anywhere. That's what I can't believe. We offered him the opportunity to get that experience and training, and he turned it down! Unbelievable!
45 weeks ago
45 weeks ago Link To Comment
What part of the country?

We just hired a freshly minted Mech E guy. Smart enough but when I ask him basic things about Civics, Math, etc. he is clueless. Does not know AutoCAD only Solidworks. But he can work his iPhone like a pro.
45 weeks ago
45 weeks ago Link To Comment
Yeah my brother's a sheet metal worker for some 30 years now and has been in the office confines for ~ the last 18-20 years. He's a self taught AutoCAD, Solidworks pro. I've a few patents whereas he's helped me tremendously via AutoCAD, suggestions.

His union (don't get me started!) laid off 90% of his company whereas he's been wearing MANY hats.

Sales, putting his tool belt back on, manning 6-10 Nextels and knowing the blueprints by heart for each respective job etc.,

He's > 2 years from retirement and is disgusted by the laziness of the Apprentices, newly-minted Journeyman he sees in the field. They're slow, lazy, indifferent etc.,

The 'You owe me' mentality for these punks is a sight to see.

I'm nearing 40 and see this demeanor from the majority of those > 10 years younger than me!

A sense of those wanting to work their way up from those 20-something's is non-existent.
45 weeks ago
45 weeks ago Link To Comment
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