The Big Lie: 5.6% Unemployment

[anthony022071]

gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx

Here’s something that many Americans – including some of the smartest and most educated among us – don’t know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.

Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job – if you are so hopelessly out of work that you’ve stopped looking over the past four weeks – the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news – currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.

There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 – maybe someone pays you to mow their lawn – you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find – in other words, you are severely underemployed – the government doesn’t count you in the 5.6%. Few Americans know this.

There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.

 

[stinkcat_14]

If someone is too lazy to look for work, why should we consider them unemployed?

 

[Path_Finder]

If someone is too lazy to look for work, why should we consider them unemployed?

Would you call people who have looked for work weeks or months on end, lazy?

 

[stinkcat_14]

Would you call people who have looked for work weeks or months on end, lazy?

If they are looking for work, they are counted in the unemployment statistics. Yes, I would call anyone who wants a job and refuses to look for one lazy.

 

[Monkey1976]

If they are looking for work, they are counted in the unemployment statistics. Yes, I would call anyone who wants a job and refuses to look for one lazy.

No matter how hard one looks, they’re still dropped from the statistics once unemployment benefits run out.

 

[stinkcat_14]

No matter how hard one looks, they’re still dropped from the statistics once unemployment benefits run out.

That is not correct. The unemployment rate has nothing to do with whether or not one receives benefits. It is from a totally separate survey.

 

[JimG]

If someone is looking for work but has not applied for unemployment compensation how will they be known or counted? I know of several persons who look for work but have no dealings with unemployment offices.

 

[Path_Finder]

That is not correct. The unemployment rate has nothing to do with whether or not one receives benefits. It is from a totally separate survey.

All the same, if unemployment is taken using different data than in the past, in that sense the unemployment rate may be understated. U1, U6 and so on.

 

[styrgwillidar]

As I understand it, this methodology has been used for the past several administrations. If it’s a lie, it is a consistent lie. If we change the methodology now, well, it won’t be consistent with how the number was determined in the past.

So, as has always been the case the employment situation in the US is more accurately portrayed by considering BOTH the unemployment rate and the labor participation rate. To be fair, that’s how I’m hearing it reported on the news in my area. That the unemployment rate is good, but the labor participation rate is bad compared to past years/decades.

 

[Corki]

If they are looking for work, they are counted in the unemployment statistics. Yes, I would call anyone who wants a job and refuses to look for one lazy.

Not exactly. Only if they are still reporting their job search to the local unemployment office are they “counted”. If you have maxed out your weeks and are no longer getting unemployment, you are unlikely to be reporting in the local UI office. Same thing if you were disqualified for some reason (such as accepting PT work) or if you get sick and can’t look for work for a period of time. Laziness has nothing to do with it.

Long term unemployment is never counted in the official stats. There are some economists that extrapolate a number based on historical trends but it is not an actual statistic and it’s not reflected in the official unemployment rate.

 

[J_Peterson]

If someone is too lazy to look for work, why should we consider them unemployed?

At a certain point a person becomes unemployable. How many years does someone have to (unsuccesfully) look for work to not be considered lazy? Once the ravishes of poverty and homelessness start hitting home (teeth falling out, failing health, addiction, no money for appropriate clothes, inablilty to keep clean, etc.) it will be almost impossible to find work. At that point they are as damned as Sisyphus.

I guess we can change the descriptor at that point to unempolyable rather than unemployed. That would be more accurate.

 

[stinkcat_14]

If someone is looking for work but has not applied for unemployment compensation how will they be known or counted? I know of several persons who look for work but have no dealings with unemployment offices.

The department of labor does a survey every month of the general population.

 

[stinkcat_14]

Not exactly. Only if they are still reporting their job search to the local unemployment office are they “counted”. If you have maxed out your weeks and are no longer getting unemployment, you are unlikely to be reporting in the local UI office. Same thing if you were disqualified for some reason (such as accepting PT work) or if you get sick and can’t look for work for a period of time. Laziness has nothing to do with it.

Long term unemployment is never counted in the official stats. There are some economists that extrapolate a number based on historical trends but it is not an actual statistic and it’s not reflected in the official unemployment rate.

Like I said before, the unemployment rate has nothing to do with whether and how many people are collecting benefits.

bls.gov/cps/cps_htgm.htm

Some people think that to get these figures on unemployment, the government uses the number of people collecting unemployment insurance (UI) benefits under state or federal government programs. But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed.

 

[on_the_hill]

I wouldn’t necessarily call it a lie.

The people who use the statistics know what the figures mean.

 

[Jeanne_S]

If someone is looking for work but has not applied for unemployment compensation how will they be known or counted? I know of several persons who look for work but have no dealings with unemployment offices.

Not to mention the self employed who may have lost their business…they aren’t factored in either.Add to that,that can’t even collect unemployment!
We are self employed,just my hubbie and me ,we have come full circle ,right where we started over forty years ago.Still have to pay a bit into the FUTA,even though we can never draw from it.

 

[stinkcat_14]

Not to mention the self employed who may have lost their business…they aren’t factored in either.Add to that,that can’t even collect unemployment!
We are self employed,just my hubbie and me ,we have come full circle ,right where we started over forty years ago.Still have to pay a bit into the FUTA,even though we can never draw from it.

Like I have said several times, the unemployment rate has nothing to do with collecting benefits. It is a totally separate survey. If you lose your business and look for work, you are counted as unemployed. All you have to do is look for work.

 

[Jeanne_S]

Like I have said several times, the unemployment rate has nothing to do with collecting benefits. It is a totally separate survey. If you lose your business and look for work, you are counted as unemployed. All you have to do is look for work.

They are connected to the extent that as long as one can draw unemployment,the incentive to actively look for work is diminished.Largely due to the fact that once an individual accepts a job,if it is for considerably less than unemployment benefits,they are on the losing end of the deal,especially if they should be laid off at some time from that job.The subsequent unemployment benefits will be even less than before.So,it behooves someone to stay the coarse until benefits expire.Since they are continually bring extended,there is a misconception re the actual unemployed.

 

[stinkcat_14]

They are connected to the extent that as long as one can draw unemployment,the incentive to actively look for work is diminished.Largely due to the fact that once an individual accepts a job,if it is for considerably less than unemployment benefits,they are on the losing end of the deal,especially if they should be laid off at some time from that job.The subsequent unemployment benefits will be even less than before.So,it behooves someone to stay the coarse until benefits expire.Since they are continually bring extended,there is a misconception re the actual unemployed.

If you are saying that unemployment compensation may increase the duration of unemployment, you might be right. If that is the case, the the 5.6% would be an overestimate of the unemployment rate.

 

[anthony022071]

That is not correct. The unemployment rate has nothing to do with whether or not one receives benefits. It is from a totally separate survey.

States do sometimes base their unemployment rate on unemployment benefits.

The connection between receiving benefits and the unemployment rate is that in order to receive benefits,people are required to be seeking employment,and the government counts
as unemployed only those who claim to be seeking employment. So when people are dropped from unemployment benefits,it may mean they have given up looking for work or it
may cause them to give up looking for work,and they will not be counted as unemployed.

reuters.com/article/2013/12/03/us-usa-economy-joblessbenefits-idUSBRE9B20XA20131203

< The unemployment rate could fall substantially early next year as belt-tightening in Washington throws more than a million long-term unemployed Americans off the benefit rolls.

The loss of benefits could spur former recipients to either drop out of the labor force or accept jobs they previously would not have considered. Some economists estimate this could lower the current unemployment rate of 7.3 percent by as much as half a percentage point.

“The lapsing of the program could lower the unemployment rate by perhaps 0.25-0.50 percentage point, with much of the effect coming through reduced labor force participation, rather than increased employment,” said Michael Feroli, an economist at JPMorgan in New York.

To receive jobless benefits, Americans are required to be actively looking for work. That is also a key factor that defines who is unemployed, as opposed to those who have dropped out of the labor force. >

 

[stinkcat_14]

States do sometimes base their unemployment rate on unemployment benefits.

No, the unemployment rate is determined by the department of labor, the department of labor does not take people receiving benefits into account in any way.

The connection between receiving benefits and the unemployment rate is that in order to receive benefits,people are required to be seeking employment,and the government counts
as unemployed only those who claim to be seeking employment. So when people are dropped from unemployment benefits,it may mean they have given up looking for work or it
may cause them to give up looking for work,and they will not be counted as unemployed.

reuters.com/article/2013/12/03/us-usa-economy-joblessbenefits-idUSBRE9B20XA20131203

< The unemployment rate could fall substantially early next year as belt-tightening in Washington throws more than a million long-term unemployed Americans off the benefit rolls.

The loss of benefits could spur former recipients to either drop out of the labor force or accept jobs they previously would not have considered. Some economists estimate this could lower the current unemployment rate of 7.3 percent by as much as half a percentage point.

“The lapsing of the program could lower the unemployment rate by perhaps 0.25-0.50 percentage point, with much of the effect coming through reduced labor force participation, rather than increased employment,” said Michael Feroli, an economist at JPMorgan in New York.

To receive jobless benefits, Americans are required to be actively looking for work. That is also a key factor that defines who is unemployed, as opposed to those who have dropped out of the labor force. >

The point is, that some receiving benefits, were only looking for work to receive benefits. So they never should have been counted as unemployed in the first place, they had no intention of getting a job.

The lapsing of the program did one of two things, it either spurred some to find work, or influenced some to drop out of the labor force. But it is in no way used to calculate the unemployment rate.