The April 2009, unemployment numbers for the U.S. were released this morning, and the offical unemployment rate increased to 8.9%. However, the offical unemployment rate does not tell the complete story. The above chart compares the offical unemployment rate, the BLS’ U-6 rate, and what I call the suffering rate. Each one of these measures unemployment differently. Let me explain.
First, the offical unemployment rate should be thought of as a baseline. Then there is the U-6 rate which is the BLS’ broadest offical measure of unemployment. It takes the offical unemployment rate and adds to it. The U-6 rate includes:
1) Those that fall into the offical unemployment rate.
2) Plus all marginally attached workers (BLS defines marginally attached as: persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past).
3) Plus those employed part time for economic reasons.
The U-6 is then measured as a percent of the civilian labor force plus all marginally attached workers. The U-6 is a broad measure of unemployment, but misses some of the people. For example, individuals that want a job but have not looked for work in the recent past (last 12 months) are not included. However, the suffering rate does include these individuals.
The suffering rate includes:
1) Those that fall into the offical unemployment rate.
2) Plus all individuals that the BLS states ”want a job” (even if they have not looked for work in the recent past).
3) Plus those employed part time for economic reasons.
The suffering rate is then measured as a percent of the civilian labor force plus all workers that want a job.
To get a clear picture of the unemployment situation in the U.S. you need to look past the offical unemployment rate of 8.9%. You even need to look past the BLS’ U-6 measure of unemployment that stands at 15.8%. I think the suffering rate of 17.8% is the broadest (and best) measure of U.S. unemployment (under-empolyment).
A few other points about the April 2009, employment numbers:
1) Nonfarm payroll employment declined by 539,000 jobs which was better than expected. However, much of the improvement was due to government hiring. Employment in the private sector fell by 611,000 jobs.
2) Job losses in February and March were worse than previously reported. February job losses were revised to 681,000 from 651,000. March job losses were revised to 699,000 from 663,000.
3) The number of individuals unemployed for 27 weeks or more (long-term unemployed) increased by 498,000 to 3.7 million last month.
Data Source:
Bureau of Labor Statistics
Tables A-1, A-7, A-12, and The Employment Situation, April 2009.
All numbers are seasonally adjusted.
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Hi,
I see lot of articles reflecting real interest rate as -ve, and so principle debt is ever expanding. Do you have any charts to know what is real interest and to what is projected?
Comment by egoldspot — May 10, 2009 @ 10:31 am
Not something I’ve charted. I am concerned about what happens with the economy if/when interest rates start increasing. Especially, given all the government debt that eventually will pressure rates to increase. What happens if foreign countries stop buying U.S. debt? Rates increase. Then much of the debt in this country becomes more expensive to carry.
Comment by admin — May 10, 2009 @ 1:39 pm
I cannot recall if the suffering rate is an estimate or if there are actual stats to back it up? Please confirm. I keep touting the suffering rate to folks but want to be sure I fully understand what official stats go into that number before I get too loud. Thanks.
Comment by John Fontana — May 11, 2009 @ 6:20 am
Yes, I base it on actual stats. In the suffering rate I include: 1) those offically unemployed, 2) those working part time for economic reasons - basically those working part time, but want full-time work (the BLS shows these stats in its report A-7), and 3) those that want a job, but the BLS says have dropped out of the labor force (regardless of when they last looked or their availability). The BLS has a broad measure of unemployment they call the U-6 that includes most of these same individuals. The difference with the U-6 is that it does not include those individuals that want a job, but are not available to work or have not looked for work in the past 12 months. I include these individuals because many of them are so discouraged with the job market they have stopped looking.
Comment by admin — May 11, 2009 @ 7:30 am