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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Truer unemployment rate rises to 16.8%

Don't be fooled by the fact that the official U.S. unemployment rate in February remained unchanged from January at 9.7 percent.

The truer measure of unemployment in the United States rose from 16.5 percent in January to 16.8 percent in February.

As I do every month when the new unemployment numbers come out, I'm going to unpack the data to give you a truer picture of joblessness.

It is true the official rate remained unchanged at 9.7 percent and the economy shed only 36,000 jobs last month. That's a lot better than this time last year, when the economy was hemorrhaging 700,000 jobs per month.

However.

As I've written before, the official unemployment rate is a narrow -- statistically legitimate -- but narrow measure of unemployment. It is based on a monthly rotating survey of 60,000 households plus data received from employers. In order to be counted in this number, you have to be a) out of work, and b) looking for work. That number tells us there are officially 14.9 million jobless Americans.

You are not included in the 9.7 percent rate if a) you would like to have a full-time job but can find only part-time work, and b) if you've grown so discouraged at finding work, you've simply given up.

If you include all of these people into the number -- all of the people who should be working full time but are not -- the truer U.S. unemployment rate is a much higher 16.8 percent.

But why did that number rise in February when the 9.7 percent number stayed the same?

Because the number of discouraged workers is rising and so is the number of part-time workers.

According to Bureau of Labor Statistics numbers out this morning, the number of part-time workers increased to 8.8 million in February, up from 8.3 million in January.

More troublesome, the number of discouraged out-of-work Americans continues to increase. In February, it stood at 1.2 million, up from 473,000 in February 2009.

I did a piece last summer that you can see by clicking here (it has a chart!) showing that one of the ways the Great Recession differed from previous recessions was the big and growing (and still growing) gap between the official unemployment rate and the truer rate. The gap between the two rates is actually greater now than it was when I first noted it, back in August, when it was then at its all-time high.

Bottom line: We can expect the official unemployment rate to hover near 10 percent at least through the rest of the year. I thought we'd seen a cap in the truer unemployment rate, but evidently I was wrong.

Follow me on Twitter at @theticker

By Frank Ahrens  |  March 5, 2010; 12:03 PM ET
Categories:  Data , Unemployment  | Tags: Bureau of Labor Statistics, unemployment  
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Comments

Mr. Ahrens, where do you get the figures to say or approximate how many people just "gave up looking" for work? Is this a guess on your part or are there some real statistics to show?

Posted by: clairevb | March 5, 2010 1:44 PM | Report abuse

So if there are now 8.8 million part-time workers compared to only 8.3 million a month ago, where did that extra half-million come from that caused your "truer" rate to tick upwards 0.3%? Were they previous employed full time (= bad sign for the economy) or were they previous outside the job market (= good sign for the economy)? One advantage of the 9.7% rate is that, while rougher, it doesn't need as much unpacking. But your "truer" rate seems to include people switching between groups, and without noting the directionality of the switches (ie, please unpack fully!), it could be interpreted wrongly.

Posted by: danevt | March 5, 2010 1:53 PM | Report abuse

Amazing how the first two commenters seem to believe Ahrens is making these numbers up off of the top of his head. The report from the Labor dept. details the number of discouraged workers and the numbers of those who are taking part-time work rather than the full time work they wanted. The "real" unemployment rate, which declined .8% last month (I think, but I can't remember exactly) and increased .3% this month is reported on by virtually every media outlet there is, so the notion that this is just some sort of "guesswork" by this particular columnist is absolutely laughable.

I would be willing to bet those who are attacking this columnist are doing so because they don't like the fact that the 16.8% unemployment number makes this particular president look bad.

Posted by: Bob65 | March 5, 2010 2:08 PM | Report abuse

First two commenters should do us all a favor and never vote again.

This is an highly refined number.... some say much more highly scrutinized than the "unemployment" rate.

If you don't understand this number, do us a favor and don't dilute the voting pool any further.

Posted by: docwhocuts | March 5, 2010 2:16 PM | Report abuse

I agree with you bob65, the numbers will continue to go higher since most people with jobs or own a company are afraid to spend money. You can't hire anyone if people aren't buying. What part of that doesn't washington/obama understand. Of course the temporary hire of census workers will help to make those numbers go down. It's sad/funny that I've been looking at starting a company and only needed about $270K loan from the bank, with a 750+ fico score. Banks are reluctant to give money to new startup companies. So, unless I'm willing to do some funky things with my 401K(about 300K), I won't have the money or the balls to start a company and hire about 10-15 people in 2010. I've played by the rules and didn't over extend.

Posted by: larry40 | March 5, 2010 2:28 PM | Report abuse

there are more than 30 million people that want jobs that don't have jobs...
and obama did nothing to encourage that trend...
sad...
isn't it...

Posted by: DwightCollins | March 5, 2010 2:47 PM | Report abuse

Bob65 - I agree with you. They don't like this Whitehouse looking bad and with these figures it DOES look bad because it is bad. I'm nearly 60 years old and I have never known so many unemployed people in my lifetime. Family, frieds, past associates, looking for work and/or working 1-2 part-time jobs to survive. Yet this Administration continues to dream up one stupid tax credit after another. The lastest "jobs bill" - what a sham -- more tax dollars down the drain!!!!

Posted by: ReneesOpinion | March 5, 2010 2:55 PM | Report abuse

"[This figure]is based on a monthly rotating survey of 60,000 households plus data received from employers." Who conducts these surveys, how are they conducted, and what determines who is surveyed? I am of middle age, recently graduated from college, and am trying to re-enter the workforce after a long hiatus. How does this figure account for people like me, and the millions of other recent college graduates?

Posted by: frankie1002 | March 5, 2010 4:03 PM | Report abuse

I've been trying to explain this to my friends for months. It’s frustrating hearing the economic numbers bc most of the time the analysis doesn’t take into account the REAL unemployment rate, which today is more than 16 percent. Unemployment rates may SEEM to be declining but it’s in large part due to the fact that if you work 1 hour per week, you’re considered employed. If you are a “discouraged worker” and stop looking for a job, you are no longer considered part of the unemployed. I found a great website, called www.FindTheBest.com, that compares the unemployment rates by city. http://unemployment-rates-county.findthebest.com/ Looks like I may be moving soon.

Posted by: gracenasanine | March 5, 2010 7:17 PM | Report abuse

Well, if you figures are correct, and I am assuming that they are, was this same type of analogy used when we were reporting all the unemployement rates in prior times, as in the time when Reagan was President, or others. To be fair, we need to use the same methology each time to do the correct analysis, or else, if we use the newer methology, then we need to make a note that it was not used prior to your reporting. Don't you thing that is fair? I know how bad unemployment is several members of my family are unemployed. I am just so tired of all the bad news, and people reporting without making sure their information is really reflective of all times. Everytime we get such a report, we make it harder for people to get on with bringing our country back, as no one knows what to do and we don't trust anyone any longer. Maybe, you need to look at ways for us to maybe repair all the problems out there.

Posted by: AColandr | March 5, 2010 9:10 PM | Report abuse

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