Unemployment Rate Confusion Explained in 2 Minutes

Post author:Stubborn_Facts
Post published:October 16, 2012
Post category:Federal / Nebraska / Network Archives

I think about 120 seconds is all it is likely to take to understand what’s going on with the unemployment rate. Let’s say 30 seconds seconds per image and any accompanying text:

Let’s start with something that confirms skepticism expressed about the unemployment number reported on October 5, 2012, which was 7.8%, and provides necessary historical perspective:

1) Amount of Employment (people employed) as a percentage of the overall population, historically.

Found at Cafe Hayek "The recession and recovery in one picture" http://cafehayek.com/2012/09/the-recession-and-recovery-in-one-picture.html

Source: Federal Reserve, Found at Cafe Hayek “The recession and recovery in one picture”

The moral of the story is, in assessing the health of the economy, it is important to look at many factors and to approach those factors from multiple perspectives. We should not merely look at the number of “unemployed” – we also need to look at the number of people who are employed and compare the current trend to those seen in the past.

2) Unemployment number which actually accounts for the long-term unemployed¹ and those who are working part time, but who would rather work full time:

Federal Reserve U-6 Unemployment Rate, http://research.stlouisfed.org/fred2/series/U6RATE

Source: Federal Reserve U-6 Unemployment Rate, based on Bureau of Labor Statistics data. “Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons (U6RATE)”

Yes, the most up-to-date number is that high – it’s 14.7%. And yes, the same agency which released a 7.8% rate on October 5, provided this same data.

3) Length of time, in weeks, people are unemployed, on average, historically:

FRED Graph: Average Duration of Unemployment

Source: Federal Reserve, “Average (Mean) Duration of Unemployment”, produced from Bureau of Labor Statistics Data

4) Unemployment rate – that U-6 rate, above, as compared to the number of Americans receiving Social Security Disability benefits (no, Social Security is most certainly NOT just for people ages 62 and up (see footnote²):

Lower Unemployment or More Disability Recipients - Graph

Click to view largest version. Sources of data: Social Security Administration annual report and Monthly Statistical Snapshot, August 2012; and Federal Reserve U-6 Rate

So…any further confusion on whether that 7.8% unemployment rate on October 5 was either great news or accurate?

{cue crickets chirping}

Any confusions about whether America is experiencing “economic recovery”?

{cue crickets chirping}

Any confusion about the policies attempted and their relative effectiveness since 2008?

{cue crickets chirping}

Oh, and is anyone else wondering how accurate or inaccurate Nebraska’s unemployment information is? Or is it just me?

Leaving uncomfortable local questions aside for the moment, regarding federal government’s number crunching, there is even more to this whole story (hey…I know, but we’re talking about exponentially expanding government, so there is always more to every story), such as with the unemployment numbers – even that official 14.7% U-6 rate I’ve included here. But, another day perhaps.

But, I bet you’re wondering now about what’s going on with those Social Security Disability benefits, right?

Well, I don’t have time right now to dive all the way into it by way of writing an article, but I recommend giving an hour to the subject – it’s well worth the time. Click HERE to visit an EconTalk posting for a very eye-opening podcast about the problems with the Social Security Disability program. You can choose from several methods to listen to Hoover Institution Fellow Russ Roberts’ interview with David Autor of MIT.

Footnotes, References & Citations

See the Bureau of Labor Statistics Glossary for their definition of “marginally attached workers”, but note that the definition moves people out of the group categorized as “unemployed” if they are not “actively” seeking work, which is another definition with problems. ↩
In addition to what most people commonly think of when they think of Social Security – payments to retired people who had payroll withholdings – there are Survivors’ benefits (spouses and children), all of which is officially referred to as “Old Age and Survivors Insurance” (OASI) and Disability Insurance (SSDI). As with the commonly thought of Social Security, Disability Insurance also pays benefits to spouses and dependents. An entirely separate program, NOT depicted in the graph, “Lower Unemployment? Or More Disability Benefit Recipients?” is the benefit known as Supplemental Security Income ↩

Tags: 2012 Election, 7.8% unemployment, actual unemployment rate, barack obama, bls, bureau of labor statistics, civil society, CLibertyC, constitutional liberty coalition, david autor, disability benefits, duration of unemployment historically, Economics, econtalk, employed as percentage of population, employment as percentage of unemployment rate, Featured, Federal Reserve, federal reserve research, for life and liberty, GiN, government spending, government statistics, government welfare programs, grassrootsne, health of the economy, how long people are unemployed, how many people are actually unemployed, long term unemployed, marginally attached workers, Mitt Romney, Nebraska, obama administration, old age and survivors insurance, part time employment, presidential election, real unemployment, russ roberts, Shelli Dawdy, social security act of 1965, social security disability, social security disability insurance program, ssdi, surge in disability applications, u-6 unemployment rate, underemployed, unemployment percentages, unemployment rate, unemployment statistics, welfare

Stubborn_Facts

Shelli Dawdy is first and foremost the mother of three children whom she has taught at home via the classical method since removing her children from school in 2001. During her early years as a homeschool mother, she worked part-time as a freelance writer. Born and raised in the Iowa, Shelli and her husband moved to the state of South Dakota in 1997, attracted to its more limited government and friendly tax environment. In 2006, Shelli and her family relocated to Lincoln, Nebraska, when her husband’s employer offered a new position. She took a break from work and politics for a time, recognizing the need to focus solely on her childrens’ schooling with two now of high school age. Distressed by many things she was witnessing on the national political scene and disillusioned about the Republican Party, she decided to start writing again, this time online. Motivated to get involved with others at the grassroots level, she networked with activists on the social media tool, Twitter. She was involved in organizing the first tea party rallies inspired by Rick Santelli’s “rant” on CNBC in February 2009. Recognizing that activism should generate on the local level, she founded Grassroots in Nebraska in March of 2009. The group’s mission is a return to Constitutional, limited government, according to its original meaning. While the group has held several tea party rallies, it’s focus is to take effective action. Among its many projects, GiN successfully coordinated testimony for the hearing of the Nebraska Sovereignty Resolution, networked with other groups to ensure a large show of public support at the hearing, and coordinated follow up support to ensure its passage in April 2010. While working to build up GiN throughout 2009, she was asked to work as writer and producer of the documentary film, A New America, which lays out how Progressivism is responsible for how America has moved away from its Constitutional roots. You can see more of her work on Grassroots in Nebraska (GiN) and StubbornFacts

1) Amount of Employment (people employed) as a percentage of the overall population, historically.

2) Unemployment number which actually accounts for the long-term unemployed1 and those who are working part time, but who would rather work full time:

Yes, the most up-to-date number is that high – it’s 14.7%. And yes, the same agency which released a 7.8% rate on October 5, provided this same data.

3) Length of time, in weeks, people are unemployed, on average, historically:

4) Unemployment rate – that U-6 rate, above, as compared to the number of Americans receiving Social Security Disability benefits (no, Social Security is most certainly NOT just for people ages 62 and up (see footnote2):

Stubborn_Facts

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2) Unemployment number which actually accounts for the long-term unemployed¹ and those who are working part time, but who would rather work full time:

4) Unemployment rate – that U-6 rate, above, as compared to the number of Americans receiving Social Security Disability benefits (no, Social Security is most certainly NOT just for people ages 62 and up (see footnote²):