By: Michael Kling
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.”