Great Depression jobs parallel may not be far flung

[JCMach1]

Source: Khaleej Times

When economists tell us the current U.S. slump could never turn into another Great Depression, they all point to one thing: one of four Americans was out of work in the 1930s.
File photo of unemployed people looking for a job during the Great Depression, 1935. (Franklin D. Roosevelt Presidential Library and Museum/National Archives and Records Administration) - ReutersBut since the definition of joblessness has changed over the years, this expert assessment might be too rosy.

As many as 25 percent of Americans were unemployed during the days of bread lines that symbolized the Depression, but that figure is more than three times the current 6.7 percent unemployment rate, the economists say. Even the most pessimistic estimates only foresee the rate rising barely above 10 percent.
“We are in a very, very different place than the U.S. economy was in the 1930s,” James Poterba, president of the National Bureau of Economic Research told a recent Reuters Summit.
Or are we? Figures collected for Reuters by John Williams, from the electronic newsletter Shadowstats.com, suggest that, while we are not there yet, the comparison is not as outlandish as it might initially seem.
By his count, if unemployment were still tallied the way it was in the 1930s, today’s jobless rate would be closer to 16.5 percent—more than double the stated rate.
“I expect that unemployment in the current downturn, which will be particularly deep and protracted, eventually will rival, if not top, the 25 percent seen in the Great Depression,” Williams said...

Read more: http://khaleejtimes.com/DisplayArticle.asp?xfile=data/biztalk/2009/January/biztalk_January8.xml§ion=biztalk

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We tend to get the non-rosy US economic news over here... This is definitely bad... very bad

[Davis_X_Machina]

1. U-6 in November...

...was nearly 13%.

So it's not far-fetched. U-3 greatly undercounts true under- and unemployment.

[chemp]

2. It's terrifying

I'm in the unenviable position where I was told to cut my labor. In retail it is all about "sales per labor hour" and "transactions per labor hour".
Sales fell. I now have to bring SLH and TLH back in line. It's getting cold in here.

[Tab]

3. Counting people receiving unemployment is a poor measure

Why?

1. They may have used up their unemployment, and dropped off the program.
2. They may have taken a lesser job, thus being "under" employed.
3. They may have been a consultant, or self-employed, and thus not qualifying - there are a lot of those.
4. They may just be too "proud" to take unemployment (I was when I was younger, not so much now)

Taking all the first three in mind, particularly #3, since there have been so many consultants or self-employed people, I'd say the real rate is at least double the stated rate.

[ejpoeta]

6. I don't understand number 4.

I mean, i understand that contributing to an inaccurate unemployment figure, but I don't understand being too proud for it. My sister is currently on unemployment and finds it somewhat depressing. She was working in Pampered Chef as a side job, but on unemployment, any activity in that vain would lose her a day. so if she made calls one day, she loses 20% of her measly pittance of unemployment. she had already been leaning towards stopping the pampered chef work, but the unemployment deal put her over the edge. she WANTS to work. she's afraid they'll make her take any job. she has issues like young kids.... she has to drop them off and pick them up from school. working in a job an hour away would be prblematic. wouldn't be so bad if they would pay her enough for that to be feasible. but i digress.

[Tab]

9. It may just be the era when I grew up

in my 20s, I didn't want unemployment - but with a family and now 25 years later, I have a different perspective. But I grew up feeling there was a stigma associated with it.

But you are right - there's an odd disadvantage to it - in many places, you are allowed a certain percentage of employment before it cuts into your unemployment pay. For instance, you might be allowed to earn a third of your unemployment before it starts to count against your unemployment (which you have to pay taxes on, btw). There's a disincentive to earn more, not to mention that unemployment is calculated against what you've earned over the last 10 months or whatever. If you left a high-paying job and got on unemployment, it's silly to take a low-paying job, because you'd make that much with unemployment anyway, and further, you'll trash your further unemployment qualification dollar value. I know there's no infallible way to structure this, so I can't blame the current system, unless perhaps it didn't count against you where it made you underemployed. That's the only way.

[Orsino]

11. It's America's worship of money.

Being poor may not longer be a capital offense, but is regarded as sinful by many, many of us. If the dollar is holy, poverty has to be unholy.

[ejpoeta]

24. i think the thing is that the unemployment office doesn't know how to deal with

things like pampered chef or whatever, because it is not a regular job where you go and work. it involves making phone calls and trying to get business. there is not a guarantee of income from a phone call. my sister wasn't trying to game the system or anything. there was one show she did where it was worth losing the one day pay. she had to earn a lot from a show or sales to get a commission that was worth the difference. and she and her husband are struggling as it is!! i know she was telling me she was frustrated because one of her former co-workers husbands worked in construction and works seasonal. so he gets like $500/wk on unemployment and doesn't even have to look for another job. just sits at home and collects unemployment. while my sister has to jump through hoops to keep her unemployment while trying to find work in her field. she is considering going back to school to get her bachelors degree. i think that would be a good idea for her. i don't like the idea that they make it so difficult for people. it's not like she was looking to lose her job. but i understand that they do it because of the folks that don't look for work. i would hope somday they would find a system with a better balance.

[Retrograde]

28. Neither do I

A friend who was recently laid off refuses to apply for unemployment benefits, claims he's able to collect SSI benefits next year so why bother? I say anything that helps bridge the gap is good, and he (or his company) paid into the fund so why not use it.

I wasn't that proud when I got laid-off: it kept me from dipping into savings for quite a while.

[BumRushDaShow]

8. "They may have used up their unemployment, and dropped off the program."

This is one of the BIGGEST differences between how they counted then and now. Today's numbers assume that once the unemployment check runs out, the person is assumed to be "employed". :crazy: :banghead:

It seems that no administration wants to correct this because then the numbers would look horrible under their administration.

[davsand]

19. The "under employed" thing has always kind of bugged me.

I'm not arguing that it isn't frustrating to have to work minimum wage if you are accustomed to making more than that. BTDT and it is no fun. In a time when companies are laying off people and closing up the doors you are gonna see a lot of that because there are a finite number of jobs available.

What I do not understand, however, is the idea that holding a job that is somehow less than what you want should be a figure that gets reported. I thought the whole idea for a lot of people was to "advance" and earn more money or look for a different job that paid more WHILE you were working and keeping yourself fed.

Not to be too crass about it, but when I was facing a job loss, it was a matter of taking whatever job I could get, working hard at it and paying the bills. The alternative was sitting at home and going hungry--and that was NOT an option as far as I was concerned. You can be sure I was looking for something better (and I did find it after a few months.)

Right now, however, there are just not a lot of jobs--period. Not in the executive ranks and not the lower paying category either. Just finding ANY kind of work is tough to do and that is lot like what my parents say the depression was like. Literally, a lot of times it was a matter of working for a meal (according to my parents and several other sources.) THAT is not "under employment" that is NO employment.

I honestly don't think the American people will accept that given today's feeling of entitlement.



Laura

[haele]

25. In some areas, under-employment means you're still homeless -

In very rural or low cost locals, a minimum wage job will still allow you to keep a roof over your family's head, basic utilities and food on the table, even if it's just beans, rice and whatever you could get from your garden or your neighbors or by poaching.

In cities, one, two, or three minimum wage or part time jobs may get you a studio apartment, basic utilities and some food, but if you have a family, you're still probably looking for public assistance to help feed and clothe your family, and you're probably not able to sustain any other reliable transportation other than feet, a bike, or subsidized (if you're lucky and your city provides such)public transportation.

I know and have worked with underemployed people - part-time or contract workers with families that live two (or three) households to a shared rental house in the poorer areas of town or have been lucky enough to find an RV (usually not road-worthy) in an RV campground that they can live in for $700 a month lot rental, singles or married couples living out of cars or someone's garage or spare room - or homeless living with the other migrants in makeshift camps. These are the people who shower at work or the "Y" because that's usually the only place they have access to that sort of facility or they're desperatly trying to save utility bills and still be able to keep a presentable appearance to remain employed.

Underemployment needs to be counted, just as those on disability or taking in SSI need to be counted - especially since the underemployed and unemployed tend to need the same social service nets to survive and keep their families healthy.

"Just having a job" doesn't mean you're able to keep a roof over your head. In fact, those receiving unemployment tend to have more and better "job finding" opportunities than those who are underemployed, because employment agencies that are working to get the unemployed working living wage jobs think that working 60 hours a week at two close to minimum wage part time jobs without bennies - say flipping burgers and/or cash register work - is just as good as finding a 40 hour low-mid range (over $10 an hour) job with bennies as support at a medical lab or law firm.
From experiance - the income taxes taken out on two or three part time or low paying jobs never seem to reflect the total income one has working those jobs. One always end up "owing" if there aren't any credits or deductions to offset taxes.

Haele

[Tab]

27. If you want it to be an indicator of the economy, then yes - it has to be counted.

Example: Let's say I earned $150,000 a year. Economy sucks, now I'm lucky to earn $30,000 a year. Yes, I'd be employed, but as an indicator of the economy, something's wrong with the picture.

[Runcible Spoon]

26. or they could be recent grads and have NEVER HAD a job

how are those people counted?

[Stellabella]

30. Exactly.

I wonder what the 'real' unemployment rate actually is? I thought it was about 4-5% above the government figure.

[truedelphi]

32. Also in the 1930's there were not as many safety nets in place

In the nineteen thirties, lots of people tried to be out there working who in this day and age would be home collecting disability.

And people who were older didn't stop working until they died, in many cases, as there wasn't any Social Security.

So those people are not working and not looking for work in this day and age.

[liberal N proud]

4. Look up the numbers of unemployed not the percentage

I remember reading somewhere in December, the numbers had already reached depression levels. There are more people in the workforce today then there was in the 1930's pushing the percentage down.

[SpiralHawk]

5. "Too bad about you noisy American proles. Smirk." - Commander AWOL & Republicon fatcats

[Demeter]

7. Someone on NPR Used Phrase "Those Who CHOOSE to Remain Unemployed"

It's a good thing broadcast radio is only one-way.

I can imagine half a million hands reaching through to strangle that woman.

[Retrograde]

29. Many of these are probably the same who "choose"

to be over 50. Job hunting with gray hair is not easy, no matter what your background or how up-to-date you keep your skills.

[alvagoldbook]

10. Things are getting bad out there.

http://www.youtube.com/watch?v=7XLydBjxuAg

[depakid]

12. I guess it wouldn't be DU if someone weren't hollering about or wishing for the worst

and searching high and low for something to validate it,

[RUMMYisFROSTED]

13. Yep.

Everything's great!

:party:

[depakid]

14. Why be crass

and resort to hyperbole?

[lonestarnot]

16. Why deny what's looking you in the face?

[RUMMYisFROSTED]

17. "I guess it wouldn't be DU if someone weren't hollering about or wishing for the worst"

Didn't hear any hollering.
Nor did I see any wishing for the worst-quite the contrary.

Your post was hyperbole.
Mine was sarcasm.


If you don't like the fact that the govt. unemployment numbers are bullshit by all means keep your head in the sand.
If you didn't like the source, I don't think Reuters qualifies as a stretch.


:shrug:

[depakid]

22. I'm aware of the numbers

and I'm also aware of what the Great Depression looked like on the ground and from an economic perspective.

Unforutnately, I don't think most people look back at that historically when they make the sorts of comments that are commonplace around here.

[Pale Blue Dot]

23. Great Depression 2009 Similarities to 1930's

Urgent Questions from Readers

Q: I see disturbing similarities between this crisis and The Great Depression. Both were triggered by the bursting of massive debt bubbles, for instance. But this time, the government is doing so much more to pump up the economy. So is it safe to assume that this crisis will be a lot less severe than the 1930s?

A: No, it's not safe to make that assumption. True, the government's massive intervention is a major factor. But there are also powerful factors that can offset or even overwhelm the government's impact:

* Broader speculative bubbles. In the years prior to the Crash of 1929, the bubbles were limited primarily to stock speculation and restricted to a minority of the population. This time, the speculation has engulfed not only stocks but also millions of homes, commercial properties, local governments, corporations, and entire nations.

* More household debt. U.S. households are in far greater debt today with much less savings. In the 1930s, mortgages were rarer and less onerous. For all practical purposes, second mortgages, home equity loans, creative financing, and credit cards didn't even exist. Today, they are everywhere in our society.

* U.S. is now a debtor nation. In the 1930s, the U.S. had large surpluses of foreign reserves and was a creditor to the rest of the world. Now, it has minimal reserves and huge foreign debts. As a result, there's ultimately a limit to how much Washington can throw good money after bad to save the U.S. economy before foreign investors rebel, refusing to continue providing abundant credit.

* Derivatives. In the early 1930s, derivatives were virtually unknown — a tiny niche of little consequence. Today there are nearly $600 trillion in notional value derivatives globally, according to the Bank of International Settlements. The forced liquidation of many of these derivatives could frustrate government efforts to revive credit markets, driving the global economy into a deeper decline than would normally be expected.

http://www.marketoracle.co.uk/Article7996.html

[JCMach1]

15. Hmmm.... check the weekly job figures released today

very scary...

[RUMMYisFROSTED]

18. Here's the link:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3681487&mesg_id=3681487

[truthisfreedom]

20. My prediction: Real unemployment will be at 18-20% by Dec 2009

And that's a conservative estimate.

[CoffeeCat]

21. The bottom line is...

If our government is fiddling with the unemployment numbers, to paint a rosy picture, then they are complete fools.

Hiding a percentage or two of unemployment is possible. If you buy the theory that politicians want to avoid
blame for an economic downturn, I suppose it's possible that they can play with the numbers a bit.

However, that probably only works only during slight downturns.

With the frickin house falling down all around us, it does no good to stand in the middle of the living room screaming, "Remain
calm! All is well!"

I don't know whether the unemployment numbers are hot air--and worse than what is being reported.

I do know that it's not going to matter what numbers are released. My opinion is that things are going to worsen exponentially.
If most Americans see abandoned malls and strip malls, empty parking lots at most retailers, tons of business closings and their
friends, family and neighbors out of work--and unable to find work--fudged government numbers will be a joke.

When McMansion owners start taking taking in multiple renters and there's mayhem in the streets--the old, "But unemployment is only
10 percent! Not anywhere near Depression levels!" shtick will be a moot laughingstock.

[Stellabella]

31. Thanks for this - I was wondering about these numbers.

This is really scary.

[Danascot]

33. As a good approximation of the real unemployment rate

take the "official" unemployment rate and double it. I read that not long ago, with methodology that supported the argument. If I can track down where I saw it, I'll post it.