http://www.bls.gov/news.release/empsit.t12.htm
U6 is the broadest measure of unemployment in the civilian labor force in the U.S. economy and includes those who need work but have given up the search, and those who have taken part-time jobs while still seeking full time employment. In February, that figure rose by 0.6% to 16.0%. The seasonally-adjusted U3 figure is the one typically reported in the media and does not include those who have given up and those who have been forced into part-time work.
This morning, it was announced that payrolls shrank by 651,000 jobs and that unemployment (the U3 figure) had risen to 8.1%. But this data is a curious mish-mash of data from two separate surveys. The job loss figure is generated by the “Current Employment Statistics” (CES) program, a survey of 150,000 businesses and government agencies. But the 8.1% unemployment figure comes from the “Current Population Survey,” a monthly survey of households, conducted by the Census Bureau.
The latter survey shows that the ranks of the unemployed grew by 851,000 in February, with the number of jobs shrinking by 351,000 while the work force grew by 498,000. (I can’t explain why there’s a discrepancy of 2,000. Perhaps a matter of rounding.) Normal labor force growth is about 150,000 per month, so nearly 350,000 people who were on the sidelines jumped back into the job market in February. (See http://www.bls.gov/cps/ for more info.)
And yesterday it was reported that, once again, the number of weekly first-time unemployment claims in the previous week was about 650,000, a rate that’s held steady for weeks now. That’s an annual rate of approximately 24%, or one out of every four workers, losing their job.
These are truly horrible numbers. One of my 2009 predictions, made back in November of last year, was that unemployment would top 10% this year. At the time, no economist was predicting such high numbers, and few are today. But with unemployment rising by 0.5% per month, it would only take four more months of such data to get there. It’s beginning to look like a sure thing to me. President Obama had better do something about the trade deficit fast.
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To be quite honest I’ve only become aware of the U6 statistics through articles such as this one. Thank you for the info even though the number are staggering.
I have been through several recessions in my life but this downturn is like nothing I’ve ever seen. The financial fundamentals appear to be collapsing.
I’m deeply troubled by the governments recent extreme deficit spending, socialist agenda , and tax everything not moving approach to solving the problem. I don’t know of any empirical data to support the assertion that any of this will work or has ever worked in the past. If you know of any please pass it along… 😉
I do wonder if we are about to establish one of those historical employment data points that generations for years to come will be remarking upon.
I’m afraid it will get much worse, Scott, with the U6 unemployment potentially reaching or exceeding the worst levels of the Great Depression – 25% or worse. During the Great Depression, the U.S. at least maintained a trade surplus. The positive cash flow of that surplus buttressed the government’s stimulus plan and helped to put a floor under the economy. Today, our enormous trade deficit is draining away cash even faster than the stimulus plan will replace it. We’re pouring money into a bucket without a bottom.
Although well documented in Five Short Blasts, one of the things that seems to be ignored in most of the administration discussions of the employment (or lack of) situation is worker productivity. Even with record losses of jobs, at least on a month by month basis, nobody is feeling the pinch for lack of available goods. The work force still employed is capable of producing at a more that sufficient level to meet demand. I suspect this will be true after the full amount of the stimulus money has been spent. If this proves to be the case, the stimulus will not result in an increase in demand which translates into no increase in meaningful jobs. The end result will be a temporary increase in the number of infrastructure related jobs, but no help for the economy. Workers making goods is the only meaningful solution and export sales is probably the only way to build the needed demand.
Since we’ve been ‘free traders’ for so long with the position that we can be ‘competetive’ with anybody, I don’t see where we can develop the additional market. My conclusion is that high unemployment is with us for many years to come.
On the other hand, were we to initiate a fair and balanced trade policy with a predictable reduction in imports, the demand for domestically produced goods would increase with an attendant rise in employment, increased revenue from tariffs combined with the increase in tax revenue from payroll would help offset the cost of the stimulus payouts. Win-Win.
You’re exactly right, Clyde. The jobs created by the stimulus will barely be sufficient (if that) to keep up with the rate at which population growth adds to the labor force. The stimulus will only halt the worsening of unemployment, if it works as advertised. I think the administration has been fairly open about this. They’re counting on a synergistic effect – by which the economy begins to rebound – to actually start reducing unemployment.
But I agree with you. Without fixing the trade deficit, we’ll likely remain mired in recession and high unemployment. Even IF we eliminate the trade deficit, unemployment will remain as a result of our own population density being above the “optimum” level. I can’t say for sure what that level is, but all of the anecdotal evidence says we’re above it.
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The reason why you can’t explain the discrepcy of
2000 jobs is because the BLS is fudging the numbers. One month I found an error of 4000 jobs.
Unfortunately, the BLS numbers are probably politically motivated. Probably understated. The statisticians and analysts that would find the most objective numbers would be those that are removed from any Federal Agency. Everyone knows stats can be twisted. Especially those trained in mathematics.
The criteria for U6, the definition for the qualification of the data is restrictive to start
with. For instance, it totally ignors unemployed people that have become homeless. These people can not even be polled. They don’t have phones. There are 174,000 in LA. There is an estimate of 3 million homeless in the US. Beyond the discourage worker.
Even U6 is not a complete picture of the problem. It is much deeper than anyone realizes.
Many will ask well where are the lines and crowds of uneployed people, if it is that bad? Modern technology has taken people off the streets. Work
searches done behind a computer at the library or
home. Unemployment offices are a thing of the past.
Many people are struggling with home forlosures, evictions, homelessness and bankruptcies. The FED
wants to wipe the slate clean of these people. So do city and state governments. However, more and more people will find their way into these categories.
In this climate the economy can function and even grow. Data from the 1929 Depression shows increases
in the GDP after 1931. However, the wealth of the
people was gone and did not return for more than a
decade by some measures. What made the 1929 Depression
was the ability of a large portion of the population
to sustain itself was destroyed. Which is in progress now. The bank failures was only a part of it.
Get jobs for the unemployed at a desent wage. Remove
the paper wealth, price gouging (shylocks) and scandals (toxic assets). Every sector of the economy will heal itelf.
Tim, you make a good point about the homeless. Such people obviously can’t be counted in the government’s surveys and their numbers are growing rapidly.
[…] U6 number reports that the unemployment rate for February is up a bit to 16%. That number “is the broadest measure of unemployment in the civilian labor force in the U.S. economy and includes those […]