What’s The Unemployment Rate?
Earlier this month the U.S. Bureau of Labor Statistics (BLS) released its monthly employment situation report – which contains the widely watched “U-3″ number, or the “total unemployed, as a percentage of the labor force.”
This “official unemployment rate” – currently at 7.4 percent – is determined by the BLS’s “current population survey,” a poll of approximately 60,000 households conducted each month using personal and telephone interviews.
Of course the U-3 reading – which moves global markets, helps set the Federal Reserve’s monetary policy, makes or breaks political fortunes and dramatically impacts consumer confidence – isn’t the only number the BLS publishes each month. In fact it’s not even the only unemployment rate the agency releases.
Also published on the first Friday of each month is the “U-6,” a much more accurate jobless measurement incorporating individuals “marginally attached” to the workforce. This rate – which includes involuntary part-time employees and those who have given up their search for gainful employment – is currently 14 percent (nearly twice the “official” unemployment rate). Of course the “U-6” figure generates little attention because it’s buried beneath a mound of other data in a section of the BLS report dubbed “alternative measures of labor utilization.”
Also generating little attention is the nation’s labor participation rate – which has plunged precipitously over the last five years. This figure – which measures the percentage of the working age population that’s either employed or actively seeking a job – is currently 63.4 percent, up one-tenth of a percentage point from a 34-year-low in April.
The BLS isn’t the only entity polling America’s employment situation, though.
Gallup, for example, publishes a daily employment measure derived from “30-day rolling averages based on telephone interviews with approximately 30,000 adults.”
According to the polling firm, America’s current unemployment rate is 8.9 percent – a full 1.5 percent higher than the federal government’s number. Gallup’s underemployment number? A whopping 17.9 percent.
Oh, and take a look at the trend lines …
(Pic via Zero Hedge)
We believe America’s true employment situation is much direr than the government – or even Gallup – would have you believe. In addition to the chronically low labor participation rate (which artificially drives the unemployment rate down), growing numbers of Americans are forced to work more than one job. In fact through the first seven months of 2013, a whopping 77 percent of the jobs “created” by the economy are part-time (731,000 out of 953,000) – and that’s according to the “best case scenario” government data.
Not only that, income levels have continued to decline throughout the recession – meaning full-time jobs don’t pay what they used to (unless of course you’ve got a government gig).
Bottom line? Touted declines in one unemployment rate aren’t everything they’re cracked up to be …