The US Unemployment Rate 10% Higher than government is reporting

[Omaha Steve]

http://themancommon.blogspot.com/2009/02/us-unemployment-rate-10-higher-than.html

John Williams, Founder of Shadow Government Statistics, calculates that the jobless rate is a full l0 percent higher than the government is reporting. He also discusses the news Monday morning that American companies (including Sprint, Home Depot) are cutting about 43,000 jobs.


Video at link.

[BlooInBloo]

1. Just keep in mind: the looser you get with "what counts", the less point there is in the concept.

EDIT: Naturally, that goes for the other direction as well.

[gristy]

2. So is he saying it is 7.9% instead of 7.2%?

[HillbillyBob]

3. 17.2% There are a lot of folks that are out of work that they are not counting.

At least I think that is what he meant by 10% higher than they report.
Not surprised. I mean bushco was counting mcjobs as manufacturing.
I think the Obama Admin needs to look into how these numbers are reached too.

[gristy]

6. If it's 17.2% the correct language would be "10 percentage points higher"

How to quantify a change in percentage has confused man since the beginning of time.

[pinqy]

15. the basic definition of unemployed

has been the same since 1967. There was one minor change under Clinton in 1994 (prior to 1994 people waiting to start a new job withing 30 days didn't have to have looked for work in the previous 4 weeks to be "unemployed," but now they do). And one temporary change in what constitutes the Labor Force (domestic military was included) under Reagan (published alongside the civilian laborforce numbers and the military number was abandoned after a few years because nobody paid any attention to it.

[Idealism]

4. The government does report broader numbers

But the "official" number is off, of course. If you go the the Bureau of Labor Statistics website, you will find all measures reported. The U6 is the broadest measure of unemployment, including under-employed/ part-time workers/ discouraged workers/ etc. Right now, I believe it stands around 16%.

www.bls.gov

[corruptmewithpower]

5. Thus unemployment insurance coverage is inadequate.

How about something more like a negative income tax. This would provide a floor under which a person's income could not plummet, and it could cover everyone.

[Donnachaidh]

7. So in reality we're racing to that 25% unemployment that happened in the Great Depression

Just another 8 per cent to go. :sarcasm:

[Old Codger]

9. Already

More people unemployed than then just not as high a percentage of overall population

[MindMatter]

10. We're already there

When you consider all the people who have given up looking, all the families that have only one wage-earner when the need two, all the cases where people are working at Wal*Mart when qualified for a professional job, all the people in prison (more than any other country in the world), and all the people who are going to school because they can't find a job, we're easily at 20% if not more. That is for all practical purposes a Depression.

[47of74]

8. We need a truth in reporting act

[pinqy]

13. Why?

BLS's methods are publically available online on their website. BLS Handbook of Methods (Chapter 1 is the Unemployment calculation)
Technical Notes for the Current Population Survey
The Census Bureau has some on their site as well: www.census.gov/cps

[snot]

11. how does this fudging compare to the fuding during the "Great Depression"?

or do we even know?

[pinqy]

14. We don't know

There were no real surveys of Unemployment during the Depression. Prior to 1937 the Labor Force concept was not based on activity, but on whether you claimed an occupation from which you had earned money. This results in an overestimation of employment.

In 1937 the Census did a mail survey that used the "activity concept" of if you worked or didn't work and if you looked for work. The first monthly survey didn't start until 1940.

The "official" unemployment figures for the 1920's and '30's were first published in 1948 and are estimates imputed from what little data was available.

[pinqy]

12. One of the problems with Mr. Williams

is that he never addresses real methodological concerns or the reasons the stats are the way they are. The Unemployment Rate is meant to be a measure of how available labor is being underutilized. Note the word "available." If you are not looking for work, then you're not available for work because how could you be hired? How are employers supposed to know you're there? Since this is the main purpose of the measure, the international standard is that a person is unemployed if they are currently (within the last 4 weeks) actively looking for work, and are available to start work. If you are waiting for recall from a temporary layoff, you do not need to have been looking for work. If you are on the Union rolls, that counts as looking for work.
This is the definition used since 1967. There was one change in 1994 requiring that people starting a job still had to have looked in the previous 4 weeks.

More specialized figures aid in analysis and research, which is why BLS publishes the following measures:
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
U-2 Job losers and persons who completed jobs, as a percent of the civilian labor force
U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)
U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
U-5 Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers

Definitions: Employed are those who worked at least one hour for pay or more than 15 hours as an unpaid worker in a family business.

Unemployed are those who did not work for at least one hour, were available for work, and had looked for work in the previous 4 weeks.

Everyone else is considered "Not in the Labor Force" because they are not actually participating in the Labor Market.

However, there are some subsets of the Not in Labor Force that are important to look at. The Marginally Attached (a group first defined in 1994) are those who did not work, did not look for work in the past 4 weeks, but want to work, are available to work and have looked in the last year.

A subset of the Marginally Attached are "Discouraged Workers" who did not look specifically because they didn't think they could find a job they could get.

Mr. Williams uses a modified U-6, using the pre-1994 definition of "discouraged workers" which did not have the 1 year requirement.

But why? What are his methodological reasons for preferring his version? The problem with claiming the U-6 as the "real unemployment rate" is that it is far to subjective and does not measure actually available labor. From a practical stand point, someone who is not looking for work but wants to work, is no more a participant in the Labor Force than someone who doesn't want to work. And stating that you want to work when you haven't done anything to get a job in over a year makes you not all that reliable.