Truer U.S. unemployment rate drops to 17.2%
The truer rate of unemployment in America dipped to 17.2 percent in November, down from its recent historic high of 17.5 percent in October.
As regular readers of this blog know, I like to dive into and unpack the national unemployment data when they come out each month to find a truer picture of unemployment than is painted by the headline-grabbing rate that is first reported. In today's case, the headline is that U.S. unemployment has dropped to 10 percent in November, down from 10.2 percent in October.
That number is not a lie or a purposeful obfuscation -- but it is only one way to count the unemployed. I believe it is too narrow of a definition of unemployment and one that does not take into account the wider misery caused by this recession.
Both numbers come from the Labor Department's Bureau of Labor Statistics.
The headline number -- 10 percent -- is arrived at by the BLS collecting data from employers and conducting a monthly survey of 60,000 rotating households. The BLS asks clearly defined questions -- "Did you look for work in the past X weeks?" and so on. The reason they do this is because if you ask an open-ended question -- "Are you unemployed?" -- you'll get useless data, because peoples' definition of unemployment differs.
As I said, that is one way to collect data. But the number that survey comes up with -- in this case, 10 percent unemployment -- does not take into account all the people who should be working full-time but are not. Specifically: people who want full-time jobs but can only find part-time ones and the unemployed who have become so discouraged that they have given up looking for work.
That number in November stood at 17.2 percent, down from 17.5 percent in October, a recent high. As a way of comparison, the worst unemployment in the modern U.S. -- 25 percent -- came in 1933, in the nadir of the Great Depression.
Another way to look at today's unemployment numbers: If you take out the part-time workers who would rather be working full-time but keep in the discouraged ones, the November unemployment rate was 11.3 percent, down from the recent historic high of 11.6 percent in October.
What's the takeaway from today's numbers? Unemployment, any way you slice it, is still at its highest rates since the early-'80s recession. This continues to be a huge political problem for the White House and the vulnerable members of Congress who face midterm elections next year.
That being said, today's dip in the rates is a bit of a breather for the White House, and it comes only one day after President Obama held his big jobs summit, in which he invited business leaders to the White House to try to come up with ways to bring down unemployment.
A cautionary note: We won't know until this time next month whether today's dip is a trend or a blip. Remember back in July, the official unemployment rate dipped to 9.4 percent from 9.5 percent in June. In August, it went right back up to 9.7 percent and continued climbing until today.
That was a statistical blip caused by a troubling fact: So many unemployed Americans had become discouraged and checked out of the labor force that it actually shrank a statistically meaningful amount, temporarily bringing down the unemployment rate.
And one other cheery note, while I'm at it: If today's 10 percent figure ends up holding as peak unemployment, don't expect it to start dropping right away. History tells us that unemployment rates either continue rising or at least stay very high for months -- if not quarters -- after previous recessions have ended.
-- Frank Ahrens
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December 4, 2009; 11:08 AM ET
Categories: The Ticker | Tags: unemployment
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