[Related: A) Here We Go Again…Debating Henwood on Official US Govt. Job Stats; and B) Benl8 Weighs In: Refuting Henwood on Labor Force Participation and the Missing Millions of Workers]
Source: Jack Rasmus: Predicting the Global Economic Crisis
A reader of this blog recently asked an important question: what do I think is the actual unemployment rate in the US today, not the media’s 3.8% that is almost always quoted. Here’s my reply as to why I calculate the real, actual unemployment at minimum to be 10%-12%.
“The real unemployment rate is probably somewhere between 10%-12%. Here’s why: the 3.8% is the U-3 rate, per the labor dept. That’s only for full time employed. What the labor dept. calls the U-6 includes what it calls discouraged workers (those who haven’t looked for work in the past 4 weeks. Then there’s what’s called the ‘missing labor force’–ie. those who haven’t looked in the past year. They’re not calculated in the 3.8% U-3 unemployment rate number. Why? Because you have to be ‘out of work and actively looking for work’ to be counted. The U-6 also includes what the labor dept. calls involuntary part time. But it should include the voluntary part time as well, but doesn’t (See, they’re not actively looking for work even if unemployed). But the involuntary part time is itself under-estimated. It counts only those involuntarily part time unemployed whose part time job is their primary job. It doesn’t count those who have second and third involuntary part time jobs. The labor dept. also misses the 1-2 million workers who went on social security disability (SSI) because it provides better pay, for longer, than does unemployment insurance. That number rose dramatically after 2009 and hasn’t come down much (although the government and courts are going after them). The way the government calculates unemployment is by means of 60,000 monthly household surveys but that survey also misses a lot of workers who are undocumented and others working in the underground economy in the inner cities (about 10-12% of the economy according to most economists and therefore potentially 10-12% of the reported labor force in size as well. The labor dept. just makes assumptions about that number (conservatively, I may add). But it has not real idea of how many undocumented or underground economy workers are actually employed since these workers do not participate in the labor dept. phone surveys, and who can blame them. The SSI, undocumented, underground, etc. are what I call the ‘hidden unemployed’.
Finally, there’s the corroborating evidence about what’s called the labor force participation rate. It has declined by roughly 5% since 2007. That’s 6 to 9 million workers who should have entered the labor force but haven’t. The labor force should be that much larger, but it isn’t. Where have they gone? Did they just not enter the labor force? If not, they’re likely a majority unemployed, or in the underground economy, or belong to the labor dept’s ‘missing labor force’ which should be much greater than reported. The government has no adequate explanation why the participation rate has declined so dramatically. Or where have the workers gone. If they had entered the labor force they would have been counted. And heir 6 to 9 million would result in an increase in the total labor force number and therefore raise the unemployment rate.
All these reasons–-i.e. only counting full timers in the official 3.8%; under-estimating the size of the part time workforce; under-estimating the size of the discouraged and so-called ‘missing labor force’; using methodologies that don’t capture the undocumented and underground unemployed accurately; not counting part of the SSI increase as unemployed; and reducing the total labor force because of the declining labor force participation-–together means the true unemployment rate is definitely over 10% and likely closer to 12%. And even that’s a conservative estimate perhaps.”
The one Tubularsock likes is if you GIVEN-UP looking for work you’re not counted.
Now there’s some solid thinking there when one is counting the unemployed.
And if you are not counted you don’t exist. And people believe Penn and Teller are good magicians!
LikeLiked by 2 people
Seeing reality is all about categories and definitions, eh.
It seems like it all depends on how you look at things, or rather, on how you don’t look at things.
You’re unemployed if you are looking for work, but not if you aren’t looking. Try that on traffic the next time you decide you need to cross a busy street.
Not seeing is the secret of Penn and Teller and more so of outstanding government statistics.
LikeLiked by 2 people
I haven’t had a real paycheck sine 2004 – am I counted? Nope.
LikeLiked by 2 people
Nice. So you have been getting by on “fake-paychecks”? Tubularsock does have some experience “altering” photo documents. Are there any pointers you are willing to pass on, LT?
LikeLiked by 2 people
That’s because you’ve given up on the idea of ever again receiving one, Lara. The BLS will have no truck with defeatists. Just change your expectation, and voilà! You will see that you will magically appear on the roll.
LikeLiked by 1 person
By creating unregistered laborers who are uninsured, all capitalist governments should take Thailand as an example, so that they can keep the unemployment figure below 1% per year. 🙂 https://www.bangkokpost.com/learning/work/466226/why-thailand-unemployment-rate-is-ridiculously-low
LikeLiked by 1 person
Well, there’s your solution right there:
“Because there isn’t much by way of unemployment insurance in Thailand, there isn’t any impetus to stay jobless.”
People are ever unemployed only because governments are misguided enough to ever offer anything akin to ‘unemployment insurance.’
If only they would stop giving away money for free and, of course, stop trying to count people without any incentive to work, then you wouldn’t have any unemployed. The rate would be 0% per year!
Is it a wonder, then, that undocumented workers are ever welcomed with open arms?
Thank you for the link, Migo!
LikeLiked by 2 people
A better idea Norman, at least Tubularsock thinks so, we pay EVERYONE the same amount we subsidize the corporations for exploiting OUR natural resources and then the workers could stay home and write poetry.
A much better world that would be!
Cheers!
LikeLiked by 2 people
Writing poetry, if only I could. But a brilliant idea you’ve had, nevertheless!
Here is an interesting fact to lend support to the righteousness of your argument, that the rich and their corporations reap more than their fair share under the current arrangements:
“. . . it must be stated, the SSA data shows that the collective income of the lower-earning half, or 82 million workers, is just over $1.1 trillion. The national income, which I take from the Joint Committee on Taxation (Overview, 2017), was about $14.4 trillion. So, the lower half earned in wages less than 8% of all income. Who received the other 92%?
[…]
See here: http://www.stateofworkingamerica.org/index.html%3Fp=29591.html —
You can check, the lower 80% earned 50.2% of all wages, and wages were 54.3% of all income, therefore their wage income was 27.3% of all income.”
What rhymes with: “ain’t this just a tad disgusting?”
(Source of that quote: HERE)
LikeLiked by 1 person
May Tubularsock suggest,
“It may be time for some rich man busting
Stopping their constant money lusting.”
Tubularsock knows we can go on from there, we uncounted poets.
LikeLiked by 1 person