Don't Be Fooled About Jobs: No Change in U-6 – “Real” Unemployment Rate is Still 14.7%

Despite the Democrat spin you're hearing, the real unemployment picture for September was no better than in August.

Although the Obama campaign is spinning the new 7.8% September unemployment rate furiously as something positive, there’s nothing to celebrate. 

I can’t explain the statistical calculations that made the official unemployment rate for September drop to 7.8 percent. But I do understand that the number of underemployed Americans, according to the government, actually increased from 23.1 to 23.2 million between August and September.

To arrive at this more meaningful assessment of the current employment situation, I reviewed the Bureau of Labor Statistics’ numbers that include, not only the unemployed, but also the underemployed – people like me who are working less than full time, but not by choice – and those who are “marginally attached” to the workforce. 

“Marginally attached” workers haven’t looked for work in the past four weeks but want jobs.  The sum of unemployed, underemployed and marginally attached workers is often referred to as the U-6 rate (as opposed to the U-3 rate, which reflects only the number of unemployed).  Many think the U-6 rate is a more accurate reflection of the actual impact of the economy on the labor force.

The September numbers of unemployed, underemployed and marginally attached workers, reported Friday, are 12.1 million, 8.6 million and 2.5 million, respectively, for a total of 23.2 million people. These figures equate to an underemployment rate for September of 14.7 percent.

I compared these to the August numbers of unemployed, underemployed and marginally attached workers, which were 12.5 million, 8 million and 2.6 million, respectively, for a total of 23.1 million people. These figures translated to an underemployment rate of 14.7 percent, the same rate as September’s.

Another number of particular interest to me hasn’t changed either. That’s the number of long-term unemployed, defined as those who have been out of work for 27 weeks or more. In August, this number was five million people, or 40 percent of the unemployed. In September, it was 4.8 million, still 40 percent of the total number of people reported as unemployed.

Too pessimistic? OK, just so you don't think I'm one of those glass-is-half-empty people, here’s a positive note on which to conclude: at least the September numbers are no worse than the August ones!

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chris October 12, 2012 at 01:21 PM
I said Dazed, that Welch was right in questioning the numbers. You don't address the facts do you? Again - "to arrive at this 7.8% number, you would have to have 5.5% growth rate -- something we haven't seen since 1983!!! Are you going to tell me that is in any way, shape or form possible??"
chris October 12, 2012 at 03:45 PM
Oh Lucinda's blog from the Topeka Newspaper -- now THAT's the bastion of political commentary I go to for ALL my analysis -- thanks Belleville for my Joe Biden-esque laugh of the day.
Patriot October 12, 2012 at 06:20 PM
Belleville Sentinel Take off your occluded "red"colored glasses and face the truth. You speak of half-truths and falsehoods?.... Why not the blatant lies that Biden spewed in the debate last night concerning the grotesque murder of our Ambassador in Libya and three other Americans. It was disgusting! This administration denied requests to protect or even attempt to rescue our men in Libya because it would have proven that the situation in the middle east is not getting better. The US is in horrible shape. They are bankrupting our great country and continue to LIE to the American people. THEY BOTCHED THE JOB just like they have botched handling our economy, are unemployment and they have IGNORED OUR CONSTITUTION. They can throw Billions of dolars away on Solindra and other stupid Green companies but the choose not to protect their own. There is a dictator in the WH lying to the American people and you choose to be blinded by the pap they are dishing out. You have socialism running rampant and congressmen that are afraid to vote against this administration. Each minute of the day the noose tightens against our freedoms and liberties. This administration is the worst in our history. Some day you will wake up and find that you no longer have rights: not to property, choice, or pursuit of happiness.
Dazed not Confused October 13, 2012 at 02:41 AM
Chris, Thanks for asking. How about the fact that the BLS has produced these statistics using the same methods for many years, and has a good audit record. There is nothing but Welch's assertion to suggest there was any wrongdoing. Even our friend Fran did not suggest this. Re. your 5.5% growth 'requirement,' your formula is not consistent. Growth is within the margin of error. I'm not a huge fan of Obama either and I don't think he has the cajones to get involved in manipulation. He's no Nixon or Clinton... Back to the numbers..Don't like Krugman? Try this: http://www.businessweek.com/news/2012-10-12/surprise-jack-welch-missed-shows-better-u-dot-s-dot-growth-economy
Gloria October 14, 2012 at 01:01 PM
Love this one Fran. You can see the glass in the water. Keep posting!


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