Thread: Unemployment: Worse Than it Looks

Unemployment: Worse Than it Looks
The most publicized measure of U.S. unemployment tells only part of the story
By Moira Herbst

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As U.S. jobs disappear at a rapid clip, the official unemployment figure seems understated. While November's 6.7% rate is a full 2% higher than the same time last year, the rate remains well below the 10.8% postwar peak, reached in November 1982. One issue is that the official unemployment number captures only a slice of the total joblessness in the U.S. To be counted as unemployed in this statistic, a worker must not have a job, be currently available for work, and have actively sought employment within the last four weeks. In other words, a lot of the jobless are left out of the government's tally.

Rajeev Dhawan, director of Georgia State University's Robinson College of Business, says the official unemployment rate is "not a good measure of what is happening in the economy. It's drawn from a sample too small and filled with too many assumptions. Absolute job losses and retail sales give a better idea of what's really happening in the economy."

Fortunately, digging deeper into the labyrinth of the U.S. Bureau of Labor Statistics' (BLS) Web site can offer a more complete, if imperfect, picture of joblessness. Since 1993, the BLS has tracked a category of unemployed called U-6, which captures the total unemployed, plus what the agency calls "marginally attached" workers and those employed part-time "for economic reasons." For November 2008, that rate was 12.5%, nearly double the official unemployment rate and the highest since the government started tracking this category.

Outside Looking In
Marginally attached workers are those with no job and who aren't hunting for one but who are interested in working—people who have left the workforce because the employment situation seems so bleak that they've stopped trying. This measure covers anyone who has looked for work in the past 12 months, not just the past four weeks. In November, 1.9 million workers were marginally attached, up 637,000 from a month prior. This category includes long-term unemployed, such as factory workers who can't find a job paying close to what they'd been earning before. Unemployment rates in construction and extraction jobs such as mining hit 12.1% in November, followed by 9.4% in production jobs. That means the ranks of the marginally attached will increase.

Those employed part-time for economic reasons, who are counted as employed in the official statistic, want and are available for full-time work but have had to settle for a part-time schedule. As of November, the number of workers in this category rose by 621,000. There are now 7.3 million involuntary part-time workers, up 2.8 million over the past 12 months.

Contract workers, sometimes known as freelancers or independent contractors, face a special set of problems when it comes to being counted by the government. First, employers aren't required to report layoffs of contract workers to the government, so when companies say they're cutting their contractor workforce—as Google (GOOG) did in October—no one knows by how much. These job cuts are also not recorded in the official job-cut statistics tracked by the government. In other words, the 533,000 jobs lost in the November count don't include any of the tens of thousands of contract workers being slashed from company payrolls as the recession deepens.

Falling Between the Cracks
Some self-employed workers are incorporated into other BLS statistics, but not all of them are counted. Those traditionally considered self-employed, such as independent real estate agents or accountants, are included in the government's household survey of the unemployed. But those working as long-term freelancers for one particular company without the benefits of being staff members—often dubbed "permalancers"—are not. That means a good portion of this group, which the Government Accountability Office says makes up 10% of the workforce, isn't properly tracked. "We really don't know what is happening with the [contractor employment] numbers," says Sara Horowitz, founder of the Freelancers Union, a 93,000-member organization of contract workers. Horowitz says the government should develop better measures of contract workers, perhaps by identifying the number of contractor tax filings with the IRS each year. "An increasing part of the economy is driven by this new workforce, but government agencies haven't updated their methods for counting them," she says.

The BLS does capture other pieces of the unemployment puzzle. It breaks out such demographic categories as education levels. As of November the unemployment rate for college graduates increased less than a percentage point, to 3.1%, while the unemployment rate for high school dropouts rose from 7.6% to 10.5%. The BLS also tracks such categories as age and ethnicity; the unemployment rate in November was 32% for black teenagers, for example. Other data offer state-by-state comparisons of unemployment rates. In the most recent data, which cover the first 10 months of 2008, Rhode Island and Michigan were tied with the highest unemployment rate, at 9.3%, with California next at 8.2%. Though not officially a state, Puerto Rico's rate stands at 12%.

Still, calls for improving the BLS metrics continue. While Horowitz presses for better accounting of contract workers, Georgia State's Dhawan says the surveys need to account for population growth. "Fifty years ago, the [official unemployment] number had some validity," he says. "Now I have little faith in it."

Herbst is a reporter for BusinessWeek.com in New York.

http://www.businessweek.com/bwdaily/dnf ... _top+story

These folks of this administration should be be teaching courses in statistics manipulation, or perhaps tried for perjury. There are plenty of things, like money supply and the consumer price index, which give absolutely no idea to the average American of the economy. The M-3 money supply stats have not been reported for years, and the CPI, showing inflation, throws out food and fuel as being too volatile, in essence telling Americans things are just hunky-dory while actually being more abysmal than anyone knows.
Marginally attached. Sounds like these folks cannot get a job as they have become a bit mentally unhinged. I recommend the BLS get another term.

Wait until Obama Bin Laden grants amnesty to the millions illegally in this country who will invoke chain migration bringing in their immediate, extended family members, friends and neighbors along for the ride fraudulently claiming familial status. They will compete with unemployed Americans for what few available jobs there are. We hear illegal aliens talking about how they are sticking around waiting for the massive taxpayer funded illegal alien jobs giveaway arising from the b.s. stimulus package. Employers will hire them as they, unlike newly appointed "instant citizens" won't be subject to EEOC guidelines and collective bargaining rights so employers will continue hiring cheap illegal labor as Obama will NOT secure the borders. It never ceases to amaze me how that liar can stand in front of the American people with a straight face and tell them he will put them back to work when every one of his policies is meant to facilitate the never ending flood of cheap illegal labor into this country subsidized by taxpayers. I tried to explain this to Obamatons whose response was "there will be jobs for us as we have hope". The amount of brainwashing that has occurred under the Obama force is astounding. In the immortal words of Obi Wan Kenobi "The Force has a strong influence on the weak minded". I would say god help us all but I don't think that even divine intervention can help us at this juncture.

Let's see....50% for those over 50 and retirees having to return to work and what was it....70% for blind workers. The vast majority aren't counted.....however you count it. I always had to laugh when they'd do something like cost of living....not including food, housing or energy......what is it based on then? Cost of t-shirts and motel rooms?

You can manipulate the numbers any way you want to get the desired result you want.

Originally Posted by vortex

The M-3 money supply stats have not been reported for years, and the CPI, showing inflation, throws out food and fuel as being too volatile, in essence telling Americans things are just hunky-dory while actually being more abysmal than anyone knows.

God knows the cost of fuel and food never affect my budget

(stand back folks, lightning may strike me at any moment)