The REAL Unemployment Rates

Monday, 28 May 2012

The Real Unemployment Rate Written by Bruce Walker








Mark Twain once noted three varieties of lies in public life:
“Lies, damn lies, and statistics.” In the area of macroeconomics and
government, Twain could not have been more right. The statistics kept by
the U.S. Bureau of Labor Statistics include “unemployment,” and this
number counts those Americans who are actively seeking employment. As
many commentators have noted, when times are really tough, those
Americans who have simply stopped looking for a job drop off the
statistics, making it artificially appear that the unemployment rate has
dropped.

The nominal unemployment rate is still high, but the real
jaw-dropping fact is the number of working-age Americans who are not
working. Today that is 100,000,000 Americans out of a total population
of about 310,000,000. Demographically, about 80,000,000 Americans are
minors and about 40,000,000 are age 65 or older. That leaves
approximately 190,000,000 Americans who are adults of working age. About
half of those do not have a full-time job.

The situation, according to the very statistics of the Bureau of
Labor Statistics, show an increasingly dismal picture, when the number
of people who could be working but are not is counted. In April 2011,
the number listed in those statistics as “unemployed” was 13.8 million.
That number actually dropped in February 2012 to 12.8 million, then to
12.7 million in March and 12.5 million in April. The unemployment rate
over those four months also declined: 9.0 percent in April 2011, 8.3
percent in February 2012, 8.2 percent in March 2012, and 8.1 percent in
April 2012.

When those “Not in the labor force” are adding to those “Unemployed,”
then those who are not working is growing: 99.5 million in April 2011,
100.3 million in February 2012, 100.5 million in March 2012, and 100.9
million in April 2012. When counting both those “Not in the labor force”
(though in the age in which most Americans work) and “Unemployed” as a
single group, then those who are not working, but are in the age group
in which Americans normally work, has remained steady and high: 41.6
percent in April 2011, 41.5 percent in February 2012, 41.5 percent in
March 2012, and 41.6 percent in April 2012.

Polls shows that Americans are feeling the pinch of hard economic
times and of adult children forced to live in their parent’s basements
to keep body and soul together. The value of homes continues to remain
very low, and homes have historically been the primary investment of
most American families. Student loans these days are often not repaid
for decades after students graduate from college. All of this strongly
suggests that large numbers of Americans want and need more income and
that they are looking for jobs. And yet the 42 percent of Americans who
are of working age are not working. Despite trillions of dollars spent
on “shovel-ready” jobs, the jobs are conspicuous by their absence.
By Neil Shah

California ain’t having a great
summer. Its economy remains crippled by the housing bust. Its
unemployment rate is the nation’s third-highest, after Nevada and Rhode
Island. And officials in four of its cities — Stockton, Mammoth Lakes,
Compton and San Bernardino — recently filed or indicated they might file
for bankruptcy protection. Well, here’s one more not-so-golden medal
for the Golden State: It has the worst involuntary-part-time-worker
problem.


Associated Press

According to new Labor Department figures,
California’s average unemployment rate from July 2011 through June 2012
was 11.2% … but its broader “under-employment” rate was a whopping
20.3%. While it’s the government’s unemployment rate that moves
headlines every month — the latest, for July, comes out Friday — the
“under-employment” rate, or “U-6” rate, includes everyone else affected
by the moribund job market: people who want to work but haven’t looked
in the last four weeks because they figured no jobs were available and
those working part-time gigs but would prefer full-time positions. (By
the way, the government’s number-crunchers prefer “four-quarter moving
averages” when it comes to state data because of it’s smaller sample
size. By taking in longer time spans, the government may boost the
reliability of the findings.)

Nevada, another state battered by the housing bust, is actually worse
off than California when it comes to general underemployment. Its
average unemployment rate is 12.3%, the government says, and its
underemployment rate is 22.1% — a gap of 9.8 percentage points compared
to California’s 9.1 percentage point gap. The U.S., as a whole, has a
6.8 percentage point difference between its 8.5% unemployment rate and
15.3% underemployment rate.

Some states that are performing near or better than the national
average in general unemployment have bigger underemployment issues. For
example, Massachusetts’ 13.5% U-6 rate is more than double its headline
rate of 6.6%.

But when it comes to one particular type of underemployed citizen —
the part-timer who wants to work full-time — California’s the worst. In
economics lingo, California has the biggest gap between its overall
underemployment rate, the U-6, and the slightly less broad U-5 rate that
doesn’t include forced part-timers. It narrowly beat out Nevada. For
its part, Nevada appears to have the biggest problem with workers
ceasing to look for work after getting discouraged. North Dakota, whose
oil production ranks second only to Texas’s, ranks lowest on both of
these fronts — and also has the nation’s lowest unemployment rate.

California aside, there’s some good news in the data for the country
as a whole. The declines seen across many states’ underemployment rates
are bigger than what the government saw when it did this a few months
ago. Particularly notable are improvements for the long-term unemployed
and discouraged workers. Still, California is a huge part of the U.S.
economy, accounting for around 13% of GDP, and the bigger picture
revealed by this data is one of workers struggling to find jobs and
hours, and companies too skittish to hire.

StateUnemployment rateBroader U-6 rateDifference

Region Stats Actual Diff

United States	8.5%	15.3%	6.8
Alabama	8.6%	14.4%	5.8
Alaska	7.6%	13.2%	5.6
Arizona	8.7%	16.6%	7.9
Arkansas	7.8%	13.4%	5.6
California	11.2%	20.3%	9.1
Colorado	8.3%	14.8%	6.5
Connecticut	8.2%	14.5%	6.3
Delaware	7.0%	13.3%	6.3
District of Columbia	9.7%	14.5%	4.8
Florida	9.2%	17.0%	7.8
Georgia	9.7%	16.4%	6.7
Hawaii	7.3%	14.8%	7.5
Idaho	7.9%	15.7%	7.8
Illinois	9.4%	16.5%	7.1
Indiana	8.9%	15.0%	6.1
Iowa	5.4%	10.5%	5.1
Kansas	6.3%	11.2%	4.9
Kentucky	8.8%	14.9%	6.1
Louisiana	7.7%	13.0%	5.3
Maine	7.8%	14.8%	7.0
Maryland	7.1%	12.7%	5.6
Massachusetts	6.6%	13.5%	6.9
Michigan	9.4%	17.4%	8.0
Minnesota	5.9%	12.1%	6.2
Mississippi	9.7%	15.4%	5.7
Missouri	7.5%	13.2%	5.7
Montana	6.5%	14.3%	7.8
Nebraska	4.3%	9.1%	4.8
Nevada	12.3%	22.1%	9.8
New Hampshire	5.5%	11.2%	5.7
New Jersey	9.2%	15.5%	6.3
New Mexico	7.3%	15.3%	8.0
New York	8.7%	14.6%	5.9
North Carolina	9.8%	17.5%	7.7
North Dakota	3.4%	6.1%	2.7
Ohio	8.0%	14.0%	6.0
Oklahoma	5.8%	10.3%	4.5
Oregon	9.1%	17.4%	8.3
Pennsylvania	7.7%	13.9%	6.2
Rhode Island	11.2%	18.9%	7.7
South Carolina	10.0%	17.0%	7.0
South Dakota	4.5%	8.6%	4.1
Tennessee	8.2%	13.8%	5.6
Texas	7.3%	13.1%	5.8
Utah	6.2%	12.2%	6.0
Vermont	5.3%	10.9%	5.6
Virginia	6.5%	12.0%	5.5
Washington	8.7%	17.0%	8.3
West Virginia	7.5%	12.8%	5.3
Wisconsin	7.3%	13.3%	6.0
Wyoming	5.8%	10.7%	4.9

Source: Labor Department