The Real Unemployment Numbers

The Bureau of Labor Statistics released the June unemployment numbers last week, and they were worse than expected. They were certainly worse than what the Obama administration predicted, since they were hoping that the numbers would be dropping by this time. But all that aside, what do the numbers really mean? It all sounds very precise and “scientific,” but from the very beginning of unemployment statistics, in 1878, it was a highly manipulated number. At that time, the United States was once again in a recession and many people were out of work. But Carrol Wright, head of the Massachusetts Bureau of Labor Statistics, didn't believe that there were really that many unemployed. He called the whole thing “industrial hypochondria.” (We have recounted Wright's story at Physics Envy).

In order to prove his point, he conducted a survey that would count only those who, in his opinion, “really wanted to work.” Based on this “intelligent canvas,” he determined that there was really no unemployment problem at all. Wright was rewarded for his politicized survey by being made head of the newly formed Bureau of Labor Statistics and later head of the Census Bureau. But the problems of determining who “wants to work” and who doesn't remain with us. The BLS issues six unemployment numbers, U1 through U6. The lowest is the number of workers unemployed for 15 weeks or more and still looking for work (5.1%), and the highest includes both the discouraged workers and part-time workers who want full-time jobs (16.5%). The commonly quoted number is the U3. All of these numbers involve judgments about who is in and out of the labor force.

But here's another group of numbers, also from the BLS, that give perhaps a better picture:

  • Total Employable: 235.655 million

  • Total Working: 140.196 million

  • Total Idle: 95.459 million

  • Percentage Idle to Total Employable: 40.5% (actually not working — not 9.6% unemployment rate!)

  • Total Working Full Time: 112.489 million

  • Total Working Part Time: 27.707 million.

  • Total Not Working Full Time: 123.166 million

  • Total Searching for Work (the "Unemployed"): 14.729 million

  • Percentage "Unemployed" to Total Idle: 15.4%

Note that only 15% of the idle are counted as “unemployed.” Further, the percentage of those holding full-time jobs comes to only 47% or the total employable. It is quite true that not everybody who is not working wants to work full-time, or even at all. But it is equally true that the 9.6% number understates the problem.

Especially troubling is the “median weeks unemployed,” (17.9) which is much higher than at any time since they began reporting this number in 1967. This means that not only are people getting laid-off, they are not finding new jobs. The broadest measure of unemployment, “U6” (16.5%) is also the highest since they began keeping this statistic in 1994. The highest number before this recession was 11.8%.

All of these percentages appear to be a lot more precise than they are, since they are all dependent on the computation of the total labor force, and that depends on certain judgments about what percentage of the total employable population is actually in the labor force (the “labor participation rate.”) If you look at the numbers from the perspective of the total employable, only 59.4% have jobs, and only 47.7% have full-time jobs.

Peak employment came in November, 2007, at 146.67M. Current employment at $140.2M represents a loss of almost 6.5 million jobs. In the same 19 months, somewhere between 100,000 and 150,000 new workers enter the workforce each month, or between 1.9 and 2.8 million new workers. Obviously, the economy did not provide jobs for these workers.

19 months of job losses is a depression level number, and there has been no comparable period of job losses since that time.


JimB Sunday, July 5, 2009 at 9:34:00 PM CDT  

As the old line goes "there are lies, damned lies, and government statistics." I have doubted these numbers going back to '05 in the Bush Admin. along with their rosy economic numbers even during the boom years as I watched manufacturing jobs fly out of the state ever since NAFTA was signed.

As a (laid off from a retail job) unemployed white male approaching 60, and an "official" unemployment rate of nearly 12 where I live, I fall into the "I want to work" category - but I don't want a "job" - I want a BUSINESS. I am starting a web marketing business on a literal shoe string, but only after becoming exasperated and eventually falling into the "disillusioned" category to the point I stopped looking.

I have also been reading a lot lately about the "brain drain" of young college grads which is a real problem here in the "rust belt". States in this region are trying desperately to keep these "best and brightest" here, but are not having much success. It becomes s snowball effect where one problem feeds another.

I am placing my hope in Christ and distributivism that it will be able to turn things around, both for me personally and for the area. It's difficult at times not to get discouraged and start to lose hope.

Peregrinus_PF Monday, July 6, 2009 at 5:47:00 AM CDT  

I have heard that people that were laid off and starting their own businesses are not included in the "employed". Do not know if it is true or not.

However, if it is true, I am wondering what needs to be changed in the statistical model for it to more fit in with the distributist model.

As for the "brain drain", we are seeing it here in Michigan. Saying that, there is another type of brain drain and that is the education system. It is not preparing students for jobs and, in many cases, not educating students at all. This must be addressed under the distributist model (which I think John has already done in other postings).

Besorge Tuesday, July 7, 2009 at 10:05:00 AM CDT  

I am glad I am not going crazy, and I look at unemployment the same way.

SDben5 Wednesday, July 8, 2009 at 11:37:00 PM CDT  

I am confused about where the large # of idle workers comes from. Can there really be that many people who are not working in America?

My wife has stayed home to raise our kids for the last 6 years and now she needs to go back to work but has been having trouble finding a job. Is she part of the unemployed?

Anonymous,  Friday, August 7, 2009 at 8:50:00 AM CDT  

interesting read
let me know when those employment rates go up.

Anonymous,  Saturday, August 8, 2009 at 8:38:00 AM CDT  

Enjoyed the article

Padmanaban Tuesday, September 8, 2009 at 6:16:00 AM CDT  

Its really a shock news to see such idle members. Whether they are doing any business or whether literate or illiterate. So many question arises. The main problem lies if most of them are well qualified and remains idle.
jobs in india

daniel Monday, January 11, 2010 at 11:52:00 AM CST  

The popular comment layout is common, so it is easily recognized when scanning to post a comment. If the comment section is in a different format, then I am going to spend more time trying to decipher what everything means.

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Lots in Costa Rica Wednesday, May 26, 2010 at 2:21:00 PM CDT  

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