Actual Unemployment Rate Rises To 16.5%
UPDATED at 1:50 p.m. with analysis:
The nation's official unemployment rate in June rose from 9.4 to 9.5 percent, its highest in 26 years.
How bad is that? Pretty bad, writes Heidi Shierholz of the Economic Policy Institute: "This is the only recession1 since the Great Depression to wipe out all jobs growth from the previous business cycle, a testament both to the enormity of the current crisis and to the extreme weakness of jobs growth over the business cycle from 2000 to 2007."
Ouch. But it's even worse than that.
As we like to note at The Ticker, the nation's actual unemployment rate in June rose from 16.4 to 16.5 percent, the highest figure by far since the Bureau of Labor Statistics began keeping the data in 1994.
What is the difference between the two, aside from a higher degree of misery?
The lower figure includes only those whom the Labor Department includes in the way it figures its official unemployment data, a process we explained here.
But that figure does not include "discouraged" Americans -- those who have given up looking for work. It also does not include part-timers or others who are "marginally attached" to the labor force, as the Labor Department's Bureau of Labor Statistics puts it.
Here's the Bureau of Labor Statistics' full explanation: "Marginally attached workers are 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. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule."
Why does the Labor Department low-ball unemployment?
Well, you can chose from any number of conspiracy theories you like, but it's more likely it's about getting at least semi-reliable data.
The Labor Department cannot rely on unemployment payment numbers to gauge joblessness, because those numbers lag the real-time situation. It obviously cannot individually count each jobless person each month, either.
So it surveys a rotating 60,000 households each month. But it cannot ask people, "Are you unemployed?" because that's too open-ended of a question to produce data. A likely response would be, "What do you mean?"
So the Labor Department has to ask questions like, "Did you work in the past six weeks? Did you look for work in the past 12 weeks?" and so on.
As such, this narrow computation of data cannot paint a full unemployment picture, so it goes with what it has.
But it's probably a statistically sharper picture of those who are unemployed who fall within the survey's parameters.
Meanwhile, the Labor Department collects other data to create the "actual" unemployment figure, which is much higher. It's a little fuzzier, because it does not -- cannot, practically -- use the same data-collection and analysis parameters as is used to compute the lower number.
So, the smaller number is probably more accurate for what it measures, and the larger number is fuzzier for what it measures.
Nevertheless, it paints a truer picture of day-to-day, real-time joblessness in the U.S.
And it's been rising since December 2007.
If there's any sign for optimism, it's that the rise in actual unemployment has been slowing since jumping nearly 1 percent from January to February of this year.
Since the beginning of the year, the number has looked like this:
- January: 13.9%.
- February: 14.8%.
- March: 15.6%.
- April: 15.8%.
- May: 16.4%.
- June: 16.5%.
On a day when the Dow has so far plunged 2 percent, that's the closest thing to good news you're going to get.
Posted by: SoberLOOK | July 3, 2009 5:28 PM | Report abuse
Posted by: blakesouthwood | July 3, 2009 11:41 PM | Report abuse
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