Get PJ Media on your Apple

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
<- Prev  Page 2 of 2   View as Single Page

U6vsU3rateDifference1994toOct2013

Though Big Labor’s beef has always been somewhat valid, the difference between the U-3 and U-6 rates was almost always between three and five percentage points throughout the 1980s, 1990s, and the majority of the most recent decade, meaning that there was no reason to be overly concerned about that difference — until the POR economy came along.

As seen in the above chart, the difference between the U-3 and U-6 rates gradually and consistently fell during the first six years the BLS began formally tracking U-6. It rose during the 2001-2002 recession, fell slightly for a few years after that, and remained stable until the spring of 2008.

Then disaster struck. The difference quickly widened, not at all coincidentally beginning when America figured out that Barack Obama would likely become its next president, i.e., when the POR economy began. After only a year, the U-3 vs. U-6 gap, which had almost never been above 5 points, exploded to over 7 points. After Barack Obama’s nearly five years at the helm, the gap has barely narrowed, and is still miles above any previous era.

But even the U-6 rate understates how bad things are. That’s because of the staggering number of people who have dropped out of the workforce entirely. While many of those involved are retirees, most aren’t.

The civilian labor force dropped by a seasonally adjusted 720,000 in October. The BLS says that the government furloughs did not influence that decline. In the 57 months since Barack Obama took office, the labor force has grown by only 607,000 — an average of less than 11,000 per month. Meanwhile, the adult population has grown by 11.642 million.

If only a very conservative one-third of the 11.035 million additional adults who are now sitting things out (11.642 million minus 607,000) were included in the workforce, the U-3 and U-6 unemployment rates (without adjusting for the furloughs) would be much, much higher:

AdjustedU3andU6unempRates1013

Based on the above, it is reasonable to assert that almost 16 percent of Americans would like to be working full-time somewhere — and aren’t.

Related to all of this, the overall workforce participation rate has dropped from 65.7 percent to 62.8 percent during Barack Obama’s presidency thus far. That rate dropped by 0.4 points in October alone, to the lowest level seen since 1978.

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.

Obamacare threatens to turn what is already a very rough situation into a potential cataclysm.

Barack Obama’s “signature achievement” discourages work. Its millions of individual and small employer group policy cancellations will suddenly force millions of Americans to spend hundreds of dollars extra per month most of them don’t have, leading to massive cuts in discretionary spending — or will cause them to go without insurance entirely. A no-growth Obamacare Christmas may well be in the offing.

As long as the Obamacare albatross hangs around, employers will have to play it close to the vest on hiring. The uncertainties about what this authoritarian administration may or may not do are too daunting — and we don’t even know whether the Mother of All Website Failures will ever function properly.

The only real solution is the one certain courageous conservatives pushed in September before they were overcome by the wing of the Republican Party which, carrying on in the sellout tradition of Bob “Tax Collector for the Welfare State” Dole, is on track to become the welfare state’s health insurance premium collectors.

At this point, defunding Obamacare and repealing it entirely is an absolute necessity. Once that occurs, we might finally be able to talk about how to embark on a meaningful economic revival and how to make the all-inclusive unemployment rate come down.

<- Prev  Page 2 of 2   View as Single Page
Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.

Comments are closed.

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.
49 weeks ago
49 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?
49 weeks ago
49 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.
49 weeks ago
49 weeks ago Link To Comment
All Comments   (29)
All Comments   (29)
Sort: Newest Oldest Top Rated
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.)
49 weeks ago
49 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.
49 weeks ago
49 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!
49 weeks ago
49 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.
49 weeks ago
49 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.
49 weeks ago
49 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?
49 weeks ago
49 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.
49 weeks ago
49 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.
49 weeks ago
49 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.
49 weeks ago
49 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.
49 weeks ago
49 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.
49 weeks ago
49 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...
49 weeks ago
49 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%.
49 weeks ago
49 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.
49 weeks ago
49 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.
46 weeks ago
46 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.
49 weeks ago
49 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..
49 weeks ago
49 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?
49 weeks ago
49 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!
49 weeks ago
49 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.
49 weeks ago
49 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.
49 weeks ago
49 weeks ago Link To Comment
1 2 Next View All

3 Trackbacks to “What Is the Real Unemployment Rate?”