Submitted by Alasdair Macleod via GoldMoney.com, Unemployment is the one statistic that one would have thought is easy to define: just total up the number of people on unemployment benefit and there's your answer. It is however much more complex, particularly in a large country like the United States, whose potential labour force is estimated to be 250,080,000 across all 50 states plus Washington DC. Of this total 101,479,000 are not currently employed, a ratio of over 40%, and of these only 8,575,000 are deemed to be actually unemployed. The relevant figures are here. The reason this matters is unemployment is one of the three key variables macroeconomists use to formulate policy, the other two being GDP and the rate of price inflation. Indeed, the Fed's Open Market Committee has set the unemployment rate as one of its two policy targets. This becomes questionable at best when the officially unemployed are less than 10% of those who could be in work but are not. Looking at the distribution of benefits doesn't help either. With benefits distributed on a rules-based system, many unemployed do not get benefits. For example, in the US there are 2,472,547 "insured unemployed" at the state level, compared with 8,575,000 officially unemployed, so less than one in three are actually on benefits and less than one in forty of those in the not-in-labour-force category, making this figure useless for policy guidance as well. Insured unemployed are announced weekly with the Initial Claims announcement by the Department of Labor, while the number officially unemployed is announced separately by the Bureau of Labor Statistics (BLS) monthly on the first Friday of the month following. The BLS works on very tentative estimates while the insured unemployed figure, which is the hard number, forms only a small part of the overall picture. Estimates for population growth add to the confusion. According to the BLS, the total number of people not in the labour force has actually increased over the last year to March by 279,000, though the number classified as unemployed has fallen by 1,804,000. Even these figures will be revised long after they are relevant in the light of the next population census; but on the face of it the increase in jobs is not keeping up with the estimated increase in the working population. Job creation is an on-going process, admittedly hampered by the reluctance of banks to lend to smaller businesses, which form the bulk of any economy's activity. Despite what the GDP numbers say about growth or its absence, economic progress continues with people buying better mobile communications, new autos and flat-screen TVs. The tragedy of unemployment is that these benefits are unaffordable to most of the unemployed. It's not that they are work-shy: much of the problem is that in a zombie-like economy, scarce capital resources are not being redeployed productively while debt is mounting, so job creation becomes unnecessarily slow. One would have thought disappointing unemployment numbers would add to the evidence that the US economy is weakening, already foreshadowed by falling commodity prices and the dramatic slide in shipping rates. We had such an event over Easter when the BLS announced non-farm payrolls was 120,000 less than expected, and the previous two months' figures were also revised downwards by a further 69,000. Is this confirmation of an economy about to slide? Maybe, but unemployment statistics are too unreliable as an indicator and should never have been adopted as a policy tool.
One common misunderstanding about the baby boomers is that it is a bubble when you graph age demographics. It's not. BBers replaced themselves quite well. It is much more like a nice ramp up that levels off - in other words, once the boomers croak the US population will not tank. The really interesting thing is Japan *actually* has a bubble. Once their bubble generation dies off, their population will sink like their economy.
Supposedly U6 is the one to watch nowadays. And it is looking better even if it is around 11% but at the same time it is approaching "support" which in this case is the opposite of the conventional interpretation: U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force NOTE: Persons marginally attached to the labor force are those 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 past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. 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. Updated population controls are introduced annually with the release of January data.
You have to understand the U6 rate is closer to reality than the standard. So if other countries calculated their numbers like this one (maybe they don't but don't divulge them) their "real" rates would be higher as well.
I understand this quite well, and have made many posts on the subject on this very website in the past. It depends on the country. There are countries out there whose stats contain underemployed, etc.
Ugh, I knew you'd ask that. I do not have the patience and time required to go looking at all developed countries to get that info. I did it once before and remember how exhausting it was. If that means you refuse to accept it as fact, then oh well. I accept that failure to provide a source means I surrender the ability to claim it as such, even if I know it to be true. For example, if memory serves, China measures unemployment through a registered database. Not in the database because you didn't register? Not counted. From Business insider back in 2010... As a result, the official U.S. unemployment rate – now 9.7% – can be misleading. The effect is multiplied when it compared with the jobless rates of other nations because there is no single standard for measuring unemployment around the world. Countries cite rates in markedly different ways. Some consider applicable job age to be younger than in the U.S. Others only measure urban areas to differentiate job seekers from subsistence farmers. These discrepancies present problems for an analysis of a county’s “unemployment rate,” and skew results. This is a good article, however, for some perspective that reflects what I was referring to. Take it or leave it. https://www.gfmag.com/global-data/economic-data/worlds-unemployment-ratescom On a side note, payroll taxes might also be a better way to look at the overall employment situation of a country. There are some negatives, but I think it's much better than a BLS where there are all sorts of seasonal adjustments, "birth-death models" and other ambiguous/obscure "statistics".
Yes I would ask because of your previous post: ... 11% unemployment in a country like the US is quite telling of the economic "recovery". How can it be telling if you don't have the numbers of other countries to compare to. I don't have the numbers either so I definitely can't say either way. No need to comment further.
Well, no need to read further if you don't want to, but I'll clarify my statement with an additional comment. We keep hearing everywhere about the recovery. Yet, the only real recovery is in the nominal price of the stock market. Macro data is horrid (see chart below), inclusive of unemployment. You can talk to the fact that the unemployment rate (U6) is getting better, but job gains are going to the over 55 crowd, are part-time, etc. (see my previous charts in this thread) They're not the jobs of our generation (assuming you are 30-55). They're not the "good" jobs. They're the bartender/waiter/Walmart Greeter type (I'm speaking anecdotal at the moment). If you believe the employment rate is all rosey and there's nothing but reason to celebrate, you should go on believing that (please pass me the joint after you're done, though).