Actual U.S. Unemployment: 15.8%

[Omaha Steve]

http://voices.washingtonpost.com/economy-watch/2009/05/actual_us_unemployment_158.html?hpid=topnews

This morning's news that U.S. unemployment has hit 13.7 million, pushing the rate to 8.9 percent, tells only half the story of this recession.

The total number of Americans who are not working full-time but ought to be is actually about 22 million, or 15.8 percent, according to the Bureau of Labor Statistics.

Who are those other 8.3 million Americans? Call them the unofficially unemployed.

As The Ticker points out each time the Bureau releases the monthly unemployment figure, it does not include many out-of-work Americans.

There are many reasons for this.

The bureau, which is under the Labor Department, cannot use unemployment compensation records to count the out-of-work, because they are not reliable or up-to-date enough. The bureau also cannot count every out-of-work person.

FULL story at link.

[slay]

1. K&R - people need to know our government SEVERELY underestimates the unemployment number

FOR REAL! :grr:

[nilram]

2. agreed

[quiller4]

3. I suspect I am counted by BLS as unemployed

but that isn't how I view myself. I didn't file for unemployment. I'm not seeking unemployment and I've turned down job offers. I consider mysel "unofficially retired". I wonder how many others there are like me in those figures.

I don't understand why they can't use unemployment filings. Application is via computer and you can get daily tallies from most states--not just monthly.

[pinqy]

6. If you're not looking for work...

... then you're not counted as unemployed.

The reason unemployment claims aren't used is because not everyone files or is even eligible to file for unemployment. If you've just graduated from school or were a stay-at-home spouse you're not eligible for unemployment insurance but you're still unemployed.

State unemployment figures do use filings as a baseline, but not the National figures.

[progressoid]

4. And what about the self employed that are now losing their income?

Are we counted?

[pinqy]

5. One more time on definitions

Remember we are talking statistical science here...the Unemployment rate is based on a sample (60,000 households/month) representing the entire country. In order for that to have any meaning, definitions have to be precise, exclusive, objective, and narrowly defined for what you're looking for.

The purpose of the official unemployment rate is to measure the percentage of underutilized labor: in effect, this has to mean people actively trying to get a job, and failing. Lots of people don't have jobs....most of them don't want to work. The practical effect on the economy of someone not looking for work is the same regardless of their reason for not looking...they're not working and will not get a job because they're not looking for one. So we can't count them as "unemployed" because they're not really an available labor source. As for the underemployed, that's incredibly subjective....If you're going for a definition of "unemployed," you can't rationally include people who do have jobs.

So the official definition for unemployed is 16 years or older, not in the military, prison, mental institute, did not work at all during the reference week, available to work, and currently (within the last 4 weeks) actively seeking work. That's good for what it's for...a base measure of underutilized labor (inability to find work). But there are other factors of the labor market worth looking at, so there are 6 alternate measures.

Defining the "Labor Force" as the Employed and Unemployed, the alternate measures are:
U-1 Unemployed for longer than 15 weeks as a percentage of the labor force. Useful for measuring long term unemployment.

U-2 People who lost their job or finished temporary work as a percentage of the labor force. Useful for measuring loss of jobs as opposed to people entering the labor force and not finding work.

U-3 is the official Unemployment figure

U-4 is the Unemployed plus "discouraged workers;" people who aren't looking because they don't believe they'll find work (too subjective to be part of the official measure) as a percentage of the Labor Force plus discouraged workers. Useful for measuring attitudes about the job market and a potential source of labor if situations/attitudes change.

U-5 is U-4 plus all other "marginally attached:" people who looked for work sometime in the last year but aren't currently looking for whatever reason (transportation, medical, child care issues etc) as a percentage of the Labor Force plus all Marginally Attached (which includes discouraged workers). Useful as a broad measure of potential (but not actual) sources of labor.

U-6 is U-5 plus all those working part time because their hours were cut, business is slow, or cannot find full time work as a percentage of the Labor force plus the marginally attached.

As of yet, I haven't heard a single methodological or statistical argument for why U-5 or U-6 should be the official measure. U-4 has been debated for decades, but its subjective nature proves too difficult...the ILO and Eurostat and the majority of statistical agencies in the world use the basic U-3 measure (though the ILO definition includes the military while the US excludes it).