…When the December 2011 unemployment rate was released, I didn’t have the data to support my view that there was no way the unemployment rate was actually 8.6%. All a rational person has to do is pay attention to related economic information. The gross distortion in the more accurate rate vs the rate published by the media results in people thinking the economy is much better than it is. It is insane we continue to allow our governmental leadership to be staff by people who simply do not understand that private enterprise creates jobs and our current government prevents jobs creation by a continual increase in rules regulations and taxes.
The detailed report follows:
Unemployment Far Worse Than Official Rate
The method used by the Bureau of Labor Statistics to calculate the official unemployment rate understates the real unemployment problem by a significant margin.
The official rate stood at 5 percent in January 2008, shot to a high of 10.1 percent in October 2009, and came down to the current rate of 8.6 percent — still 3 points above the 1948-2007 average of 5.6 percent.
“Unfortunately, the reality is even worse than these numbers suggest,” according to American Enterprise Institute resident scholar Aparna Mathur and Matt Jensen, an economic researcher at AEI.
In an article on the RealClearMarkets website, they point out that the BLS defines the labor force as those who are employed or those who have actively looked for a job within the past four weeks. The rate calculation therefore excludes workers who have stopped seeking work, and employees who settle for part-time jobs because they cannot find full-time employment.
But the Bureau of Labor Statistics also publishes an alternative measure of unemployment, referred to as the “U-6 rate,” that includes those who have looked for work in the past 12 months and those who work part-time even though they would like full-time jobs.
“The U-6 rate offers a clear picture of how precarious a situation we are in,” the authors declare.
That rate has moved from 8.8 percent in December 2007 to 17.4 percent in October 2009 and 15.6 percent last November. So the gap between the official rate and the U-6 rate is a hefty 7 percentage points.
Also, more than 5.7 million Americans have been out of work for more than 27 weeks — 43 percent of all unemployed.
“The tremendous increase in long-term unemployment is one factor driving the unprecedented disparity between the official measure of unemployment and the alternative measure,” the authors write.
Expectations of higher tax rates and uncertainty over new regulations are encouraging businesses to hold off hiring full-time workers and instead offer part-time and temporary jobs, they say, adding: “The main challenge facing the Obama administration is to improve the employment situation. An easy way to start is by restoring faith in the economy and providing certainty about the future in the minds of consumers and businesses.”
Article Courtesy of:
International Business Development Consulting
Real Estate Investment Consulting
Connect With Steve On:
|Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert international business and real estate investment coach focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue and profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource information.|