LEO HINDERY’S ANALYSIS: REAL UNEMPLOYMENT DECREASED BY 686,000 EVEN AS 988,000 LEFT THE US WORKFORCE As UCubed has done for months, we provide Leo Hindery’s take on real unemployment. His analysis fills in the many gaps left by the Bureau of Labor Statistics (BLS) monthly announcement. However, as the news media reported, the biggest changes BLS reported in April were the decrease in the civilian labor force (down by 806,000) and the increase in the not-in-labor-force (up by 988,000). Basically, a million more Americans dropped out of the workforce and that drove the unemployment rate by 4/10’s of one percent. Since the Great Recession started, the not-in-work-force number has increased by 13.1 million! Leo Hindery’s analysis starts with the government’s own numbers: A.) U.S. employers added 288,000 non-farm jobs, versus the WSJ’s consensus forecast of 215,000 new jobs. This April figure compares to March’s revised increase of 203,000 non-farm jobs and to February’s revised increase of 222,000; B.) April’s non-farm jobs figure includes 273,000 more private sector jobs plus 15,000 more government jobs; C.) The official unemployment rate decreased by 0.4% to 6.3%; and D.) Based on the Census Bureau’s separate monthly survey of “households”, there were 9.8 million unemployed persons. BLS’s figures do not reflect Real Unemployment because BLS counts only those persons who are actively looking for employment. Specifically: 1. BLS does not include among unemployed persons (i.e., the so-called ‘numerator’) the 9.6 million workers in total who are either “marginally attached” or “part-time-of-necessity.” a. Marginally attached workers, of whom there are now 2.2 million, are workers who “while wanting and available for jobs, have not searched for work in the past four weeks but have searched for work in the past twelve months.” Included among them are 0.8 million discouraged workers who did not look for work specifically because “they believe there are no jobs available or none for which they would qualify.” b. Part-time-of-necessity (P-T-N) workers, often referred to as the “underemployed”, are workers who are unable to find full-time jobs or who’ve had their hours cut back. There are now 7.5 million P-T-N workers whose underemployment should be of continuing grave concern. (Note: The characterization “underemployed” is sometimes mistakenly used to describe younger workers whose academic training is overmatched with available employment.) 2. BLS does not include in the civilian labor force (i.e., the ‘denominator’) marginally attached workers (although it does include P-T-N workers). Hindery’s Summary of U.S. Real Unemployment makes the adjustments necessary to determine, first, the number of Real Unemployed Persons and, second, the Real Unemployment Rate. In April 2014: A.) The number of Real Unemployed Persons decreased by 686,000 to 19.4 million (i.e., the 9.8 mm unemployed persons BLS identified plus the 9.6 mm workers in total who are either “marginally attached” or “part-time-of-necessity”); B.) The Real Unemployment Rate decreased by 0.4% to 12.3%; and C.) In addition to the 19.4 million Real Unemployed Persons at April 30, there were another 3.9 million persons who, while also saying they want jobs, have not looked for work in the past twelve months. Simply because they haven’t looked, these persons are not included among marginally attached workers; if included, then April’s Real Unemployment Rate of 12.3% increases to 14.4%, a figure more than twice the official BLS rate of unemployment.
Posted on: Sat, 03 May 2014 20:26:02 +0000
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