Michael Kling: “US Unemployment Rate Is Really 14.3 Percent” – Money News

Posted on :Jul 31, 2013

By: Michael Kling

Money News

July 31,2013

Government statistics are hiding the true unemployment rate.
While the  Bureau Labor Statistics says the unemployment rate has been around 7.5 or 7.6  percent in recent months, it’s really 14.3 percent.

Why the difference?  The commonly cited unemployment number ignores people who want to work but are  no longer actively seeking jobs and counts part-time workers as employed even if  they’d prefer full-time jobs.

The government statistic called U-6, however,  does take into account those groups, people the government calls “marginally  attached” to the labor force.

In June the U-6 was 14.3 percent,  unemployment worse than in Italy and Ireland, notes the International Business  Times. It’s almost 3 percentage points higher than the European Union’s  unemployment rate.

While the U.S. population has increased by 12.4  million since December 2007, the labor force as increased by just 1.9 million,  the Times notes. The number of people not employed or not seeking work increased  by 10.1 million.

The number of part-time workers has doubled over the  last five years, increasing by 322,000 just since May. Even the 14.3 percent U6  number may be worse than it seems because many new jobs are part time.

Another statistic to consider is the employment-to-population ratio, which is  the lowest in decades. In other words, a smaller percentage of adults are  working. The ratio was 58.7 percent in June, compared with 63 percent five years  ago.

Former BLS Commissioner Keith Hall calls the publicized  unemployment rate is “misleadingly low,” according to the New York Post. A more  accurate measure is about 3 percentage points higher, around 10.6, he notes.

The commonly cited number counts people who work only a few hours a  month as employed, Hall tells Post. But if people are not actively seeking work,  they are not counted as unemployed.

The U-6 figure is a more accurate  measure, says Hall, a senior research fellow at the Mercatus Center at George  Mason University.

“If the jobless rate is unacceptable at 7.6 percent,  it’d be shockingly bad if he is right and the true rate is 10.6 percent,” the  Post states.

“This has been a very slow, very bad recovery,” Hall tells  the newspaper. “And I think the numbers have really struggled as a result. In  fact, I’ve been very disappointed in the coverage of the numbers.”

Still, he believes Federal Reserve officials understand the different numbers.

“They are smart guys and understand data.”

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