Shadow Stats: Unemployment Is Much Worse Than We Believe.
The jobless rate fell to 8.6 percent in October from 9.0 the Labor Department said last Friday with employers creating 120,000 net new jobs last month. The true unemployment for the U.S. is 23% defined by the top line in the graph above.
The seasonally adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally attached workers as well as those forced to work part-time because they cannot find full-time employment.
Some other key points:
- Jobs created in November: The net increase in new jobs this month was 120,000. There were 140,000 jobs added to the private sector, while the public sector shed 20,000. September’s numbers were revised up to 210,000 from 158,000, while October’s jobs numbers were raised by 20,000 to a total of 100,000. Also, the U6 number dropped to 15.6 percent from 16.2 percent, its lowest level since March 2009.
- Types of Jobs: The largest share of new jobs came from the retail industry, which saw a 50,000 spike. On the other hand, manufacturing only gained 2,000, while construction shed another 12,000 jobs. This might be an indication that a lot of these jobs are temporary increases for the Christmas shopping season. Also, the largest drop was among those without college education.
- Size of civilian labor force: While a net-120,000 jobs were added in November, the civilian labor force shrunk by 315,000. In October, the civilian labor force stood at 154.198 million. There are only 153.883 in the labor force. The Civilian population grew by 172,000, yet there are now 487,0000 less people in the labor force that there were in October. Consequently, the labor participation number dropped from 64.2% to 64.0%. This, along with the upward revisions from the past two months, has caused the U3 rate to drop by .4%.
- Duration of unemployment: The average duration of unemployment is nearly 41 weeks, a record high. The average duration was 19.9 weeks in January 2009.
- Comparison to January 2009. In January 2009, the labor force stood at 154.185. 302,000 people have left the labor force since January, 2009 with the size of the working age population growing more 5.7 million during the same period . Also, in January 2009, 142.201 million were employed, over 1.62 million more than today. So we have a larger population, a smaller workforce and more unemployed workers. If the labor force was the same size as it were in January, 2009 the U3 rate would be 11%.
- Hours and Earnings: Wages slipped again with the average hourly wage dropping 2 cents an hour to $23.18. Average weekly earnings dropped $1.28 to $656.54. Aggregate hours worked also fell.
- Black unemployment actually rose .4% to 15.5%.
- The unemployment rate for those 20-24 actually rose .2% to 14.2%.
- That increase was incurred entirely by young males, who suffered a 0.9% spike to 15.6% (the rate for women actually declined .6%)
Worse than a high unemployment rate, we have an unprecedented number of people permanently giving up on the job market, a record high duration of unemployment, and, despite the drop, a terrible U6 rate. At some point, the U3 rate has to climb back to 9% if and when those people return to the labor force. It’s also worth noting that the more people sit out the labor force, the quicker Social Security and Medicare will become insolvent.
I predict we’ll see static numbers for the balance of 2011 even withe addition of seasonal hiring. The jobs numbers will go negative quickly in 2012 once these seasonal workers are dismissed.