I've written before about the fact that the published unemployment rate is a statistical fiction.* McClatchy ran a story recently that drives this point home. While the Dow Jones has soared over $15,000 and the U-3 unemployment rate is down to 7.5%, the plain fact of the matter is that the unemployment rate is low because millions of people have given up looking for a job.
One in five families has not a single family member who works. 102 million adult Americans are completely out of the workforce. 155 million are in the workforce. So let's play with numbers a little.
257 million people available to work. If 102 million are not even in the workforce, that's 39.7%. The U-6 unemployment rate is 13.9%. Altering that to figure in every one who could work (13.9% *0.603) and that's 8.4%. So the real unemployment rate would be a staggering 48.1%.
The article figures it differently** and they come up with an unemployment rate of 41.4% among adult-aged Americans. The statistics, though, don't exclude college kids (close to 15 million full time) or in jail (2,667,000).
Now a lot of people might read this and start blaming the social safety net. Consider, though, that the social safety net is doing exactly what it was designed to do by FDR: Keeping the lid on the societal pot. Without the social safety net, with 100 million or so Americans out of work, the Occupy Wall Street protests would have looked like a kiddie tea party compared to what we might really see in the streets.
And we might see that regardless. The Wall Street boom and the re-inflating of the real estate market is based on extremely cheap money. The Federal Reserve has sent the clear message that saving money is for chumps, in that the yield from savings is so low that you might as well just have your savings in cash in a safe-deposit box. That can't last forever.
Inflation, at least a moderate amount, isn't a tragedy. But with interest rates so low, we're flirting with deflation. Going into a period of deflation is like crossing the event horizon of a black hole, for things just get worse and worse. There is no incentive to spend money on any sort of durable goods in a time of deflation, for the goods will be cheaper later. You can run the mental scenario from there.
I fear we are on the cusp of things getting a lot worse. And if government is to be blamed, I blame the GOP, who has taken the position for the last five years that it is better to wreck the country than to pass any legislation that can be signed (and championed) by President Obama. And I blame the President, who has vacillated between doing nothing, doing too little, and then getting distracted by shiny legislative things.***
We are really pretty screwed.
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* Put "U-3" or "U-6" in the search box.
** They're not showing their arithmetic.
*** Gun control, for one,
WWJD: What Would Jesus Drink?
1 hour ago
3 comments:
Those employment numbers would be even worse if full-time jobs were the basis. I know plenty of folks who are only getting in 16, 20, or 24 hours per week.
The numbers aren't quite *that* bad, because there are not, in fact, 247 million adults available to work. My guess is that the vast majority of people above age 65, for example, have no interest in working. The rough breakdown from the 2010 census was 205 million people between ages 15-64 years (what they called "working age"). And figure that a fair number of the 15-21 year olds and 61-64 year olds aren't working either due to being in school or early retirement, which is 10 years worth of that 60 year range, and figure that we have basically 171 million Americans who should be in the workforce, if in fact there were jobs for them. (Digging into the census numbers deeper, that seems roughly correct). And we have roughly 143 million Americans employed. Which means the real unemployment rate is basically around 16%. If you add in the 5% or so of employed workers who are employed part time but not by choice and count them as unemployed, subtract roughly 7 million workers and... hmm, that makes real unemployment at around 20%. Hmm. Not good. But not the horrific Depression-scale number of 40%+ that McClatchy computed either.
I have absolutely no idea where McClatchy got their bogus number of 257 million Americans available for work, but it doesn't match the Census figures. Just sayin'. The situation is bad, and they're correct to call it bad -- 20% real unemployment is tragedy both because of the lost wealth that this waste of resources represents for the nation, and the personal hardships endured by that 20% -- but the fact that their math is about as good as Paul Ryan's sorta spoils the equation, so to speak.
- Badtux the Number-crunchin' Penguin
Still, how many of those "early retired" people retired because they had no prospect of meaningful work? How many students are in school because they are delaying entering (or reentering) the job market?
I suspect that the overall unemployment rate is above 20%. If even half of those people found decent jobs, that's probably get us most of the way to having a budget surplus.
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