Confusing jobless figures in need of explanation
By John Browne
Published: Saturday, October 13, 2012, 8:59 p.m.
Updated: Tuesday, February 19, 2013
Controversy surrounded the Bureau of Labor Statistics announcement the day after the first presidential debate indicating the unemployment rate had decreased from 8.2 percent to 7.8 percent.
President Obama, likely smarting from what most people agree was a victory by Republican Mitt Romney the night before, spoke of the drop in unemployment with great pride. He said the figures validate his contention of slow-but-steady economic improvement and asked voters to give him four more years to right the economy. The news was greeted by a rise in stock markets.
The jobs report met with skepticism from Republicans, who questioned the timing and the figures. A number of economic experts expressed skepticism, saying it appears odd that the percentage of unemployed would fall while the economic growth rate declines.
Despite some insistence otherwise, however, it is unlikely the numbers were “cooked.” Rather, the unemployment statistics are confusing and need explanation.
Under former President Clinton, the Bureau of Labor Statistics mandated new guidelines to exclude certain groups from the list of unemployed. This rendered the published figures unreliable as a true picture of unemployment.
Under Clinton's directive, all who had been unemployed for so long that they no longer qualified for unemployment benefits are excluded. Even though they are, in fact, unemployed and progressively impoverished.
Anyone who becomes discouraged and gives up seeking a job for more than 28 days, or who compromises by accepting part-time jobs for economic reasons, is excluded.
These “guidelines” shift vast numbers of those actually unemployed off the official U-3 list of those unemployed. Calculating under these Clintonian guidelines, the bureau reported September's official unemployment rate as 7.8 percent, down from 8.1 percent.
In addition, the bureau publishes a U-6 unemployment figure that includes those who have been forced by economic circumstances to accept part-time employment. That rate remained at 14.7 percent in September.
The noted Shadow Government Statistics publishes the total unemployment rate based on the pre-Clinton methodology — reporting September's rate at a staggering 22.8 percent.
Regardless of which political party is in office, government spokespeople focus exclusively on the official U-3 count, the heavily doctored, minimum figure. They avoid references to the larger unemployment figures that expose the realities: 23 million Americans struggling to find work.
Recent “official” monthly U-3 figures have shown signs of falling from the 10 percent reached in 2010. Some economists find this inexplicable, especially when economic growth is falling. However, during a recession, students leaving college are more likely to accept part-time jobs in lieu of permanent employment.
In September, 582,000 people accepted part-time jobs. But they are excluded as unemployed from the 7.8 percent U-3 figure. That's why some economic experts believe the 14.7 percent U-6 figure, which remains flat, is more correct.
The bureau's published Civilian Employment to Population Ratio shows 5 percent less of our population employed than in 2008. This lends credence to the 14.7 percent U-6 rate as more realistic.
John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Trib Total Media. Email him at email@example.com.
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