Excerpts from latest article by Michael Snyder at TheEconomicCollapseBlog.com
The “unemployment rate” has not been going down because people are actually getting jobs.
Rather, the “unemployment rate” has been going down because the government has been pretending that millions upon millions of American workers simply do not want jobs anymore. This is extremely misleading.
We are being told that 162,000 jobs were created in July. Okay, so that is just barely enough to keep up with population growth, and most of the jobs that were created last month were part-time jobs.
… Good paying full-time jobs are rapidly being replaced by low paying part-time jobs.
And this trend has definitely accelerated this year. If you can believe it, an astounding 76.7 percent of the jobs that have been “created” in 2013 have been part-time jobs.
… When the next great wave of the economic crisis strikes, millions upon millions of Americans are going to lose their jobs and the official unemployment rate is going to soar well up into the double digits.
U6 figures provided by the Bureau of Labor Statistics can be found here.
Rex Nutting at MarketWatch.com explains:
… In recent years, the unemployment rate has become one of the most politicized economic numbers. Which means it’s also become one of the most misunderstood numbers.
… In theory, the jobless rate should be noncontroversial. It’s simply the percentage of people who want a job who can’t find one.
… the official unemployment rate (known as the U-3 rate) was 7.7% in February; there were 12 million people who said they had looked for a job without success, compared with 155.5 million in the labor force.
But there were also 6.8 million people who said they wanted a job but weren’t even looking, perhaps because they were discouraged. Or maybe other hurdles, such as transportation problems or child-care duties, stood in their way. See the data on the BLS website.
In addition, 8 million people said bad economic and business conditions limited them to part-time hours even though they preferred to work full-time.
If you count those discouraged workers and involuntary part-timers as unemployed, the unemployment rate jumps to 14.3%. The government reports this number as the U-6 rate.
…. the U-3 rate fell to 7.7% in February, in part because the labor force shrank by 130,000. The drop in the unemployment rate to a four-year low wasn’t necessarily great news.
About 40% of unemployed people have been out of work longer than six months, far more than at any time since the Great Depression.
If we really want to understand the health of the labor market, it’d be best to focus on employment and unemployment of the working-age population, 25 to 65, and leave millions of teenagers and octogenarians out of the equation.
On that basis U6 is not quite the “real” unemployment rate, but would, Rex Nutting, still be a couple of percentage points higher than U3 — the “official” unemployment rate.
Here is U6 from 1994 until 2013.:
Here is U3 for about the same period:
(Both graphs created using Bureau of Labor Statistics data)
It looks to me that although U6 gives us a different figure from U3, the up and down trends of both graphs track closely.
How does Now compare with The Great Depression?
Both U3 and U6 figures only started being calculated in 1940 and 1946 respectively — in other words, after the Great Depression.
Further research needed.