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Real Unemployment Jumps to 16.8 Percent

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Few people are familiar with the U-6 report that is issued by the United States Department of Labor– Bureau of Labor Statistics. The U-6 (Table A-12:Alternative measures of labor under utilization) measures the real rate of unemployment in the United States.

Most news organizations report the more popular U.S. Department of Labor: Civilian Unemployment Rate. If you read the report today you learned that unemployment is 9.5 percent for June.

If you read the U-6 you learned the real rate of unemployment is 16.8 percent versus 10.3 percent in June 2008.

Real Unemployment U-6 — 16.8%


There are other groups of unemployed that are not counted in the more popular employment report. The Bureau of Labor Statistics U-6 report includes the unemployed and those that have thrown in the towel.

The U-6 report includes:

  • Total unemployed
  • plus all marginally attached workers
  • plus total employed part time for economic reasons
  • as a percent of the civilian labor force plus all marginally attached workers

In other words,

  • Marginally attached workers are persons who currently are neither working nor looking for work, but indicate that they want and are available for a job and have looked for work sometime in the recent past.
  • Discouraged workers, a subset of the marginally attached,have given a job-market related reason for not looking currently for a job.

The U-6 report counts everyone that is unemployed–officially and unofficially.

Here are some other statistics that you might find disconcerting.

  • About 2.2 million persons (not seasonally adjusted) were marginally attached to the labor force in June. 618,000 more than a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the past 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
  • Among the marginally attached, there were 793,000 discouraged workers in June, up by 373,000 from a year earlier.
  • In June, the average workweek for production and nonsupervisory workers on private nonfarm payrolls fell by 0.1 hour to 33.0 hours — the lowest level on record for the series, which began in 1964.
  • The number of long-term unemployed (those jobless for 27 weeks or more) increased by 433,000 over the month to 4.4 million.
  • In June, 3 in 10 unemployed persons were jobless for 27 weeks or more.

This morning the stock market is reacting negatively to this report. If you are wondering why, all you need to do is look beyond the obvious.

These numbers do not bode well for stocks and indicate at best, we are looking at slow growth in the months ahead.

All of the statistics in this article were sourced from the Department of Labor–Bureau of Labor Statistics.

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About All American Investor

  • Glenn Contrarian

    Since this is a politics site, one wonders about the motive in writing this article. Is it simply because Bob wants us to be better informed? Or is it because he wants us to be influenced for or against the present Obama administration?

    Hm. A mature white man who taught at the University of Georgia, and was an executive at Bear Stearns. If I were to pay attention to likelihoods, I would suspect Bob likes Obama not at all…and might be hoping that the hockey-stick graph in the article might reflect poorly on Obama.

    But then, I could be flat wrong – Bob may strongly support Obama, for just going by the same chart one sees that unemployment was lowest under Clinton, then jumped up during the Bush administration’s war on the economy, and skyrocketed in the past year.

    So…Bob – should I take your article at face value, that you’re simply trying to help educate the public? Or should I continue to scratch this particular itch?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I think you’re mistaken, Glenn. I take it as nonpartisan, only informative.

    There have been plenty of voices on BC (Nalle’s, for one) arguing for the stats provided by the BLS, to argue that crisis and the recession is nowhere as deep as many would like to believe. I myself challenged Nalle about it more than once, and he keeps on sticking to his story. So Bob’s piece does provide a corrective of sorts.

    Why should it be against Obama? He’s not a miracle worker. It IS gonna take a long long time to recover, with the stimulus package or without. We’re not out of the woods yet, not by any stretch.

  • Bliffle

    Good article, Bob. Very welcome, too.

    We are always told that the BLS numbers are too low and don’t include many unemployed, and this article gives one an alternative source.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Add all these to the list of the unemployed.

    But according to some, they’re the scum of the earth and they’re living the life of their own choosing. Lazy bastards.

  • http://www.republicofdave.com Dave Nalle

    The key caveat with this article is that the “real” unemployment rate hovered around 11% for most of the last decade, and the “real” unemployment rate in France has been between 25% and 35% for years, as it has been in the 20-25% range in most European countries.

    Even more importantly, if you consider the increase as a percentage, the jump from 10.3% to 16.8% in a year it’s a 61% increase. If you consider the increase in the more commonly used figure from 5.6% to 9.5% in that same 1 year time period, the increase is 59%, only a tiny bit less. So the actual rate of increase of unemployment isn’t much different no matter which figure you use.

    So all Bob’s alternative “real” figure does is provide a bigger, scarier number to put on unemployment which is really not substantially different from the increase in the standard figure. It just sounds a whole lot worse, what with being in double digits and all.

    Dave

  • http://www.futonreport.net/ Matthew T. Sussman

    Very nice to see Glenn is still trying to snuff out any kind of bias lying in everyone’s craw, no matter the situation.

  • http://www.maskedmoviesnobs.com El Bicho

    Maybe Glenn has trust issues with people who don’t properly hyphenate their name

  • http://www.futonreport.net/ Matthew T. Sussman

    What if his legal first name is actually All? Aren’t you the fool then.

  • http://www.maskedmoviesnobs.com El Bicho

    No, his parents would be. Although if your name is just All, it makes little sense to have the nickname Bob.

  • http://twitter.com/tolstoyscat Cindy

    Mr. and Ms. Investor probably just wanted to make All feel more normal.

  • http://www.republicofdave.com Dave Nalle


    There have been plenty of voices on BC (Nalle’s, for one) arguing for the stats provided by the BLS, to argue that crisis and the recession is nowhere as deep as many would like to believe. I myself challenged Nalle about it more than once, and he keeps on sticking to his story. So Bob’s piece does provide a corrective of sorts.

    Roger, as I pointed out earlier, it doesn’t provide a “corrective” just a different way of looking at the same information which is not more accurate or more alarming than the popular and established viewpoint.

    The reason I stick by my viewpoint is that I have looked at all of the figures on the issue, including actual employment figures, not just the very maleable unemployment figures, and while things are bad, they’re not bad enough to justify all the alarmism which some are promoting.

    Dave

  • http://www.joannehuspek.wordpress.com Joanne Huspek

    I know it’s far more than 14% in Michigan. There’s no longer a “rush hour” on 696 or the M-14 to Ann Arbor.

    Now that’s scary.

  • alejandro

    Thanks for this information. I have been reading about the ten percent unemployment rate on all the other news sites. I found some more interesting perspectives on this video, but I wish that they had used your blog as a source.

  • http://ruvysroost.blogspot.com Ruvy

    What impresses me about this article is that it simply presents facts, not “analyses” or scare tactics.

    The basic issue herew is dishonesty, a dishonesty practiced by the US Department of Labor, and gone along with by the mass media.

    The US government no longer releases the M3, or total amount of dollars in circulation. Since money is no longer linked to gold, you need a different measure to gauge the comparative strength of a currency, so that FX traders can trade based on reality, rather than fevered imaginations. Let’s pick a measure to use, just for the sake of example, one that can give any FX trader (actually the analyst, not the trader who is on the phone making deals) a sense of an economy’s strength. Let’s use the GDP, the gross domestic product. Let’s say, for the sake of this example, that the GDP of the United States is $10 trillion. Now let’s say that the M3 – what the United States government does not want you to know – is $35 trillion. Now, lots of factors go into a currenxcy trade, and they do not necessarily relate to just the GDP and the M3, the vectors used for this example. But, looking at these two vectors, the analyst can see that the dollar is really worth 35% of its traded value. Eventually, reality catches up with the perception, and the value of the dollar will sink.

    Both the previous administration and the sitting one have been spending money like drunks on a spending spree. So the answer? Withold vital data! Welcome to the Union of Soviet Socialist America.

    While Dave Nalle is right – the real unemployment rate in France is probably neatr the 25% or 30% mark, the fact of the matter is that the United States government – whose existence you celebrate today – is lying through its rotten teeth to you, the folks expected to pay its freight.

    That’s the bottom line, folks – dishonesty. The mere fact that the frogs, or the DIBs on Government Hill here do the same thing is irrelvant. You, whose lives are affected by this concerted lying, should be as enraged as I am at the liars and thieves on Government Hill here in Israel. That you waste your time quarelling over whether this dry recital of facts is an attempt to “get” Obama or not is sad indeed.

  • http://www.republicofdave.com Dave Nalle

    the United States government – whose existence you celebrate today

    I beg to differ, Ruvy. We do NOT celebrate the existence of the US government or any other government on Independence Day. You may have forgotten that the day celebrates the Declaration of Independence, which did not establish any government but severed our ties with an oppressive government and established our independence as a people.

    Dave

  • http://ruvysroost.blogspot.com Ruvy

    I’ll not quibble with you, Dave. I’ll allow you instead to read the text of the declaration itself, which provides reasons for separating from The British – and which talks of “ïn congress assembled”. While the convention that met in Philadelphia was not the government of the new United States, it was the basis for it. The Continental Congress grew from the Convention that met in Philadelphia, in order to attempt to prosecute a war of rebellion against the British forces the men who “in congress assembled” knew were coming to put down and hang this new set of traitors on the North American continent.

  • http://allamericaninvestor.blogspot.com Bob DeMarco

    Thanks for all the comments, very thought provoking.

    To clear up a few things.

    I did not have any political issue when I wrote this. I couldn’t decide whether to put it in politics or culture. Articles of this type are difficult to place on BC.

    As far as Obama goes, I don’t think the employment situation is his fault. If anything, the Federal government is doing everything it can to boost the economy. My view would be that what they are doing is a necessary evil.

    I want to thank Matt of BC for getting the article up before the market closed on Thursday.

    I have an investor blog. Most of what I write is intended to be informational. I think investors need to look at evidence and then conclude for themselves if they need to take action in the market on the information.

    I make specific recommendations on my blog from time to time.

    This article was intended to show how many people are out of work.

    I also find it disconcerting that the number of people that have been out of work more than 27 weeks is growing. I wrote about this trend on my own blog.

    If you like, you could make a leap and conclude that the reason for the big drop in stocks on Thursday was due to the ability of big investors to look beyond the obvious when viewing the unemployment report

    Unemployment went up one tenth of one percent as reported. However, the number of people out of work grew fast, and the number of people out of work more than 27 weeks grew fast.

    I intended this article to show that the unemployment situation is bleak. And might be worse that is being reported in the more popular media outlets.

    You have to look in the tables and beyond the obvious to ferret out the numbers I presented here and on my blog

    So ferret I did.

    I hope this information helps people that have 401Ks and retirement savings invested in the market.

    Bob

  • http://ruvysroost.blogspot.com Ruvy

    Bob,

    Since you are writing for investors with money to invest, I seriously suggest you forward them this article on funny money accounting by a Canadian accountant looking at how his American brethren lie through their teeth to investors. It goes hand in glove with your own articles on real statistics versus the phony ones your government uses, and ties in with the issue of fundamental dishonesty that I raised in my comment above.

    You did a great job. All honor to you! Full marks!

  • Bliffle

    The USA pioneered the Consumer Economy, where economic and business policies (and fortunes) are made by providing consumer goods. The consumer market rules. Almost all economies before that were Producer Economies where producers dictated what would be produced and made available to people.

    In a Producer Economy, unemployment is not altogether bad news: unemployment lowers the wages that workers can demand and reduces costs of production. That’s a good thing.

    But in a Consumer Economy unemployment reduces discretionary income and reduces consumption. That’s a bad thing.

    Since we DO have a Consumer Economy one would think that we ought to do as much as possible to reduce unemployment, since the scant gains made in lower wages are (more than) wiped out by losses in discretionary income.

  • Mike

    Ruvy, please move out of the US and to a country where your property is constantly seized and abused by the government and your family and possessions are constantly abused and taken by thieves and robbers. Also, make sure you find a place where they don’t have paved roads, libraries, hospitals, and general security so you can be humbled to give thanks for what you actually have.

  • http://drdreadful.blogspot.com Dr Dreadful

    Ruvy, please move out of the US…

    Ooooh boy.

    I can’t wait to read Ruvy’s response to this one…

  • http://www.facebook.com/tolstoyscat Cindy

    You forgot to count the 10% of the population that is in prison as unemployed.

  • Bliffle

    10% ???

    Sounds pretty high. 2 million total is what I recall, though it might be lower since CA has 175,000 in prison and is about 10% of total US population.

    Of course, that 175k in prison costs CA $10billion/year, or about $60,000 per year per prisoner. Unemployment is cheaper.

    IIRC, about 120k of those 175k are back in as parole violators, and of those about 80% are not parole violators for committing a crime but just from violating a technical requirement: missing or late for a parole meeting, failing a drug test, etc.

    Expensive punishment.

    Unemployment benefits are cheaper.

  • http://biggesttent.blogspot.com/ Silas Kain

    You forgot to count the 10% of the population that is in prison as unemployed.

    Should we count them? At least they don’t worry from day to day about three squares on the table, a roof over their heads or buying cheap clothing at WalMart.