Here’s the real unemployment rate
Any rate drop is from ‘discouraged workers eliminated’ from job accounting
NEW YORK – Are the reports of an Obama economic recovery based on the economy creating mostly part-time jobs and on manipulated government statistics that report an artificially low unemployment number?
According to John Williams, an economist known for asserting the government reports manipulated “shadow statistics” of economic data for political purposes, the real unemployment rate for July 2013 was 23.3 percent, not the 7.4 percent reported by the Bureau of Labor Statistics.
Meanwhile, the House Ways and Means Committee reported Monday that seven of every eight new employees under Obama have been part-time.
Williams, editor of the Shadow Government Statistics website, wrote that the Bureau of Labor Statistics report indicating July unemployment dropped from 7.6 percent in June to 7.4 percent in July was “meaningless.”
“The broad economic outlook has not changed, despite the heavily-distorted numbers that continue to be published by the BLS,” Williams wrote. “The unemployment rates have not dropped from peak levels due to a surge in hiring; instead, they generally have dropped because of discouraged workers being eliminated from headline labor-force accounting.”
Manipulated unemployment rates
Williams’ ShadowStats Alternative unemployment rate includes “long-term discouraged workers,” a category the Bureau of Labor Statistics removed in 1994, under the Clinton administration, from the government’s unemployment measures.
The BLS publishes six levels of unemployment, but only the headline U3 unemployment rate gets the press.
The headline number does not count the “discouraged” workers who have not looked for work in the past four weeks because they believe no jobs are available.
Williams has demonstrated that it takes an expert to truly decipher BLS unemployment statistics. For instance, in a table titled “Alternative measures of labor underutilization,” the BLS reports what is known as “U6 unemployment.”
The U6 unemployment rate is the BLS’s broadest measure. It includes those marginally attached to the labor force and the “under-employed,” those who have accepted part-time jobs but seek full-time employment. Also included are short-term discouraged workers who have not looked for work in the past year because there are no jobs to be found.
Since 1994, however, the long-term discouraged workers, those who have been discouraged for more than one year, have been excluded from all government data.
The BLS was reporting that the seasonally adjusted headline unemployment last month was only 7.4 percent, but it also said the broader U6 seasonally adjusted unemployment was 14 percent.
In his subscription newsletter, Williams has urged caution in interpreting BLS statistics:
“To the extent that there is any significance in the monthly reporting, it is that the economy is not in recovery, and that unemployment has made a new high, at a level that rivals any other downturn of the post-Great Depression era.”
Williams calculates his “ShadowStats Alternative Unemployment Rate” by adding to the BLS U6 numbers the long-term discouraged workers who have not looked for work in more than a year but still consider themselves to be unemployed.
Williams argues that his ShadowStats Alternative Unemployment measure most closely mirrors common experience.
“If you were to survey everyone in the country as to whether they were employed or unemployed, without qualification as to when they last looked for a job, the resulting unemployment rate would be close to the ShadowStats estimate,” Williams explained to WND.
The headline BLS unemployment rate has stayed relatively low because it excludes all discouraged workers, Williams argues.
As the unemployed first become discouraged and then disappear into the long-term discouraged category, they also vanish from inclusion in the headline labor force numbers. Those workers still are there, however, ready to take a job if one becomes available. They consider themselves to be unemployed, but the government’s popularly followed unemployment reporting ignores them completely.
Here is a more complete unemployment table that includes the seasonally adjusted unemployment percentages for U3 unemployment, as well as the same for U6 unemployment, followed by the ShadowStats Alternative Unemployment rate for both December 2011 and December 2012:
Increasingly, critics like Williams believe the seasonally adjusted U3 numbers reported by the BLS as the official monthly unemployment rate do not give a reliable picture of the true magnitude of unemployment in the United States.
The BLS definitions exclude from the definition of unemployed those who have grown so discouraged that they have not actively looked for work in the past year, without distinguishing those who would look for work if there were a reasonable chance they could find employment.
False job-creation numbers
The House Ways and Means report Monday noted the headlines “citing last week’s jobs report as the lowest unemployment rate in years may have been technically accurate, but they are also reminders that looks can be deceiving.”
“The reality, as you dig into the latest jobs data, reveals that few are finding the full-time work they want and need, and many are forced to accept part-time employment.”
To support its argument, the committee produced the following table drawn from Bureau of Labor Statistics:
The committee linked to an article published Sunday by Associated Press economics writer Paul Wiseman that said: “So far this year, low-paying industries have provided 61 percent of he nation’s job growth, even though these industries represent just 39 percent of overall U.S. jobs, according to Labor Department numbers analyzed by Moody’s Analytics.”
Wiseman noted part-time work, less than 25 hours a week, has made up more than 77 percent of the job growth so far this year.