Unemployment -- the Real Story

I know, most of you don't like having loads of numbers thrown at you, but this is one of those times when numbers can't be avoided. The bottom line is, if you are unemployed or underemployed, your rate is 100% and that's all you care about. I understand this and commiserate – underemployment was the norm for me during the "boom" of the 1980s and '90s. I missed it completely. But, we do need to see the big picture here, and that picture is beginning to resemble Dorian Gray:

The Department of Labor (DOL) announced, and the mainstream media has enthusiastically reported, that US unemployment has just dropped back below 9% and more recovery is on the way. That's the good news. There is also bad news: The Obama administration is lying; there is no recovery, this is just more political trickery designed to boost Obama's ever decreasing chances for re-election. Under scrutiny – even such inexperienced and limited scrutiny as I am able to provide here – the numbers just don't match the reality.

First – there are 6 unemployment rates, and the government isn't telling us the whole story:

The DOL doesn't say why they keep six sets of books, but here are the unemployment rates defined by the Bureau of Labor Statistics:

U-1	Persons unemployed 15 weeks or longer.
U-2	Job losers and persons who completed temporary jobs.
U-3	"Total unemployed" (this is the official unemployment rate).
U-4	U-3 plus "discouraged workers."
U-5	U-4 plus "persons marginally attached to the labor force."
U-6	U-5 plus "employed part time for economic reasons."

The U-3 rate is the rate the government and their media sheep keep quoting. I read in multiple sources that this is actually the number of people collecting unemployment. No government sources make this statement, so I cannot judge its validity; however, the DOL does add these definitions:

"Discouraged workers" are not job hunting due to a "job-market related reason."

"Persons marginally attached to the labor force" are those who have given up looking, but are available and were looking within the last year.

"Persons employed part time" want fulltime work but have had to settle for less.

We could call U-6 the "total unemployed or underemployed." I agree with commentators who say U-6 is the more accurate indication of our economy's strength or weakness.

You may also notice that government and media quote month-to-month changes. Frankly, that's ridiculous. Things don't change much month-to-month; I think 6 to 12 months is more accurate because it accounts better for the inertia in a $14.5 trillion economy. Compare, for example, the last 26 months of George Bush against the first 26 months of Barak Obama, two time periods that represent major differences in economic policy (also from DOL):

Year	Month	U-3	U-6	Year	Month	U-3	U-6
2006	Sep	4.4	7.6	2009	Jan	8.5	15.4
2007	Jan	5.0	9.1		Jul	9.7	16.8
	Jul	4.9	8.6	2010	Jan	10.6	18.0
2008	Jan	5.4	9.9		Jul	9.7	16.8
	Jul	6.0	10.8	2011	Mar	9.2	16.2

How this latest recession came to be is a discussion we'll save for later. Notice, however, that this recession was declared in December 2007, but unemployment rose only 0.6% from January to July 2008 then jumped 2.5% from July 2008 to January 2009. By inauguration day, the recession was more than a year old and the recovery should have started. [Check out Wikipedia's "List of recessions in the United States" – since the Great Depression, we've had 13 recessions, only 4 lasted over 12 months.]

I recall seeing a video of an Obama speech that promised his near-$800 billion stimulus would keep the U-3 under 8%. The U-3 went above 8% that month, and is still there. The average U-3 for the 26 months since inauguration is 10.2%; the U-6 has averaged 17.8%. Yes, the numbers are going down, but, with almost 1 in 5 Americans still unemployed or underemployed, we are far from what any reasonable American would call a recovery.

Second – the government isn't the only one looking at this situation.

A) Gallup, Inc.: One of the most respect pollsters in the world disagrees with the DOL. Gallup says, "contrary to the federal government's recent job reports, Gallup's unemployment and underemployment measures suggest that recent job increases have not been sufficient to significantly improve the jobs situation so far in 2011. Although both of Gallup's measures were marginally better in March, they remain higher now than they were in January." Overall, since January 2010, Gallup estimates U-3 has averaged 9.8%, with U-6 at 19.0%, well above the DOL numbers.

B) InvestingAnswers.com: In mid-February, Michael Snyder gave us "10 Reasons Why the Latest Unemployment Numbers are no Reason to Cheer." I summarize:

1) Economists were expecting 145,000 jobs new in January; the 36,000 new jobs were "a huge disappointment." (Ever notice that it's always a surprise – "higher than expected" or "lower than expected"; but these government economists never get it right!)

2) 150,000 jobs need to be added to the economy monthly to keep up with population growth. Not happening.

3) 504,000 Americans "dropped out of the labor force" in January. This makes the unemployment numbers look better, but most of those half-million Americans still need jobs.

4) Gallup says the unemployment rate actually increased to 9.8% in January.

5) Gallup says the underemployment rate actually increased to 18.9% in January.

6) 28,000,000 Americans want full-time jobs but don't have full-time jobs.

7) Zero Hedge says if you add those people to the official figure, unemployment would be 12.8%.

8) Calculated Risk calls this "the deepest and most brutal employment downturn . . . since World War II"; and there's no indication we'll return to pre-recession levels "any time soon."

9) DOL announced job growth during 2010 was much weaker than previously reported; after revisions, 215,000 fewer jobs were created during 2010 than originally estimated. (Again, they never get it right.)

10) According to another survey, 4 of 10 Americans are struggling "a lot" to pay the bills right now.

C) USDA: Many news sources have reprinted a chart showing the increase in food stamp use, officially the Supplemental Nutrition Assistance Program (SNAP). In December 2007, approx. 27,500,000 Americans were using food stamps. In January 2009, participation reached 32,000,000, an increase of 16.35% in just over one year. In January 2011, it reached 44,000,000, an increase of 60% in three years. In other words – despite spending $1.5 trillion dollars bailing out banks and auto companies or stimulating "shovel-ready" jobs; despite thousands of jobs "saved or created"; despite "decreasing" unemployment and underemployment – food stamp use has steadily increased for 37 of the last 39 months! (There was one tiny dip following the 2008 election.)

Is there any good news?

Yes, if you like government work. In January, The American, a publication of the American Enterprise Institute (The Enterprise Blog) reported that the government sector has increased by almost 100,000 jobs since December 2007. The private sector, by comparison, has lost 7,340,000 jobs in the same period. Contributing editor Mark Perry declares:

What about the stimulus package, revised yesterday upward to $862 billion, that President Obama claimed recently had already "created or saved 640,000 jobs" through last November, and would eventually save or create 3.5 million jobs in total? The employment data [from the DOL!] suggest that the $862 billion stimulus has yet to create a single new private sector job, as the private sector continues to shed jobs and hasn't seen a monthly gain in jobs for 24 months. To the extent that the stimulus has created or saved any jobs, they've been in the public sector, and have likely come at the expense of crowding out the growth that might otherwise have taken place in the private sector.

Last set of numbers, I promise: On average, 188,000 Americans have lost their jobs every single month for the last 39 months. According to Obama, the stimulus saved or created an average of 29,000 jobs per month during its first 22 months. January's 36,000 new jobs were above average growth, perhaps, but they were basically nothing compared to the mounting losses.

Hey, wait a minute; I thought this section was about good news!

It was, but there's just such a small amount of good news, it didn't take long for the discussion to fall back onto bad news. And, with all due respect to the President (what little there is), there won't be much good news until these liberal socialists are completely removed from the political power structure of the United States. It has been said that no part of a man's anatomy is as sensitive as his wallet. So, vote your wallet – vote conservative – then hold those conservative feet to the fire until they make substantive changes in US economic policy!

Thanks for listening, tune in next week for another rant.