The Real Unemployment Numbers

Warning: Lengthy post ahead that contains truths that talking heads and government officials would prefer you gloss over. Continue at your own peril.

Unemployment continues to skyrocket to a number far higher than 6.5% ... although this is the official number the American people are told. That number simply does not jive with every anecdotal piece of evidence, sentiment gauge, and the like. Because it's a government manufactured myth, as we've pointed out many times in the past - keep feeding the sheep false figures and hope they don't figure it out. I've long since stopped dissecting a few of the major government reports because they all have been (ahem) "modified" since the early '90s to show favorable statistics. But since we get new readers, most of whom don't recognize the "Man" behind the curtain statistics, I pull out some old blog entries to showcase reality.

Let me preface this whole charade by saying "today's" number will be revised in the future, so the market infatuation with numbers that constantly get revised within 30-60 days is in and of itself, sort of silly - but it is what it is. To that end...

• Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.

So when market participants reacted to "better than expected" August and September numbers and stock valuations changed those days - did it really make sense since it was based on a data set that meant essentially nothing? 30 days ago we told you 159,000 jobs were lost - oops, now it's 284,000. Etc. (We had to keep the real numbers a secret until the election, eh?) So aside from all the other problems with the data - that is one reason alone to basically ignore this data and just listen to the companies themselves - the companies chopping 5000 jobs here, 7000 jobs there, 8000 jobs out there.

As I've said the past year-plus,  in moments of "hopeful ignorance" i.e. "2nd half 2008 recovery!" this recession is unlike what most of us under the age of 40 will have experienced as adults. It's going to be like the late '70s/early '80s ... this is not a corporate-led recession circa early '90s and early '00s. This is our first true consumer-led recession since the very dark days a quarter century ago. Most market participants moving around billions of dollars were kids or teenagers at best during that time, so their frame of reference is completely wrong. Their playbook is the template of more recent recessions - long-time readers will know I've said this almost every week in the winter and spring of2008; and it was a major outlier prediction (many at the time were even denying we were going into a recession because the "data" said we were not!) That's what happens when you rely on backwards looking numbers instead of doing crazy things like "thinking"... patience, grasshoppers....

Next, I point newer readers to another issue in America - the Underemployment rate; this has been a growing trend as the worker class loses power to the corporate class (this is not a political statement but an economic one). Jobs are less secure, temporary employment has been growing over time (easy to cut at a moment's notice by employers), and most importantly people are working in jobs "beneath" their education level increasingly as "good jobs" are shipped off elsewhere. Because higher paying jobs crimp profits and we can't have that - how would CEOs buy 12 houses and the best art in the world under that sort of thinking? I wrote in April [Apr 2: The Underemployment Rate is Rising]

I've been struggling to think of a term for all these people who are struggling with part time work, working 2 jobs, or in contractor jobs where they get hired/fired on a daily whim ( I call them "nomad workers") This is a systematic and secular situation - nothing to do with 1 month's report or another. It is part and parcel with the erosion of living standards - and why so many in the middle and lower economic strata turn to home equity, credit cards, etc to just get by.

It is worth reading that whole entry if you are new; but the key thesis is that many are struggling with multiple part-time jobs or working in jobs they are over qualified for but need money to make ends meet as we move away from a "production" society to a "service economy" (you do my taxes, I'll cut your hair, she'll walk my dogs, he'll serve me a burger) as our multinationals move jobs away to cheaper labor pools. To that end

• The amount of people working part-time for economic reasons surged by 645,000 in October to 6.70 million, following an increase of 337,000 in September. The current level is 2.3 million higher than a year ago and is the highest since July 1993, when the tally was also 6.70 million. No higher figure has been seen since the 1982 recession, when a record 6.86 million people were working part-time for economic reasons.

Now before I show you (with Mish's help) the "reality" even if you do believe in the 6.5% rate, realize this is the same as the peak of the early 00s recession - again, let me repeat: We are theoretically just now entering a recession and already reached the previous cycle's peak unemployment. We are heading for 8-9% even using the government's useless data, which means in reality close to 1 in 5 Americans will be unemployed or working part time in jobs below what they used to have... by this time next year. This will coincide closely with dark periods in '70s and early '80s when government data was actually not a piece of fiction. But the pundits will say next summer "hey it's not even half as bad as the 70s! Why are people complaining!!?" - mark my words. Oh wait, Phil Gramm already has said this ... but I digress.

Next let's take a look at our favorite chart from Shadowstats.com showing you the trend - let me explain the data points. This chart shows our government figures (today) versus how they would show if we used methodologies we used to use when we actually told the truth to our people. So as you see below, the blue line is reality and shows a country struggling at elevated unemployment for a long time, but now it is spiking. The red line is what you are told and the mainstream media will talk about (U-3). The gray line is the broader measure of unemployment (U-6) which includes people with PART time jobs but WANT full time jobs. The blue line is reality - this is U-6 + "discouraged workers" aka people who have plain given up. Because the dirty secret about the American unemployment reports is that once people become discouraged and give up, after a short time frame they are no longer counted as unemployed. Period. They disappear into the ether. They are no longer "unemployed" - it's magic.


Note, this doesn't have today's data incorporated but I want to show the trend and what the "truth" is - low to mid 6% rate by official government statistics, 12%-ish for official government statistics plus those who want to work full time jobs but cannot find it, and 16% when you add in "discouraged" workers (gave up) that were "magically erased" in Clinton era statistics-keeping (and the Bush era was happy to keep that methodology, of course). And you can see we are already ahead of the worst of the recession in the early part of the decade in all areas.

Next, we have to show new readers the birth/death model which is bordering on lunacy nowadays - wait, it's not bordering - it's taken the full plunge. [Jan 27: Monthly Jobs Report & Birth/Death Model] You should read this whole post as well if new to "U.S. Government Statistics" but in summary this represents new business formation (or closing) in America - a guesswork. It is "fine" when the economy is generally trending slowly in one direction, but terrible when we have changes in directions. And it has been manipulated like mad - over the past year the government has been filling this data point with "new businesses/jobs" created in construction, financial services, manufacturing, etc. How is that possible? It's not - but that's what you can do when part of your official report is guesswork - you can put whatever number you want in it. We have more on this later in the post.

Now to a part that really only I talk about in the blogosphere and that is: Even when we are creating jobs, the jobs we are creating are the wrong kind; which I discussed in the same April post [Apr 2: The Underemployment Rate is Rising] The major job creators in America, instead of say "making stuff other people want," are healthcare and government. Two things bankrupting the country; that's the dirty details behind the numbers.

We have 2 huge bureaucracies - federal government and healthcare. To keep the government from going even more insolvent we should in theory be cutting jobs from these 2 white elephants. Healthcare costs spiral out of control and we hire more people - I believe healthcare is now 16% of GDP. But how do you cut costs without cutting jobs? Thats the other dark secret - most of our recent gains in jobs are either government or healthcare related. So how do you fix the long term problems in either? Chicken or egg? They are sapping our national wealth away by their huge excesses/costs BUT they also provide the main job growth as well. As with everything my expectation is the "kick the can down the road" theory will continue - keep growing these massive bureaucracies (create more jobs and costs now) and let another generation pay for it.

Even in Michigan, the one thing expanding is hospitals. And we've been in recession for half a decade now. The other kicker here is one of my big themes for 2009: state government budgets imploding. We're going to lose a lot of local government jobs - so even that is going to be go by the wayside and we'll be stuck with just federal government adding jobs day after day, week after week, month after month - killing us with costs.

From here I copy Mish's comments (a fellow blogger who actually takes the time to break down the piece of fiction) - again, the data is so manipulated I have stopped even bothering with it but for those interested you can read ahead for the gory details. My comments below are in italics - the rest are from Mish. Just keep in mind, this is all going to be revised DOWN in 30-60 days.

Here is a synopsis of the BLS report.

Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.

Highlights

• 49,000 construction jobs were lost

• 90,000 manufacturing jobs were lost (making stuff? that's for loser nations - we do low paying services here baby!)

• 38,000 retail trade jobs were lost (ok well maybe that services thing doesn't work all the time but ...)

• 108,000 service providing jobs were lost (err... ummm... well at least we have the high paying white collar - who needs low paying service jobs!)

• 45,000 professional and business services jobs were lost (err.... umm... about that high paying white collar work)

• 21,000 education and health services jobs were added (hello healthcare, good to see you growing - can't wait when healthcare spending takes 1 of every 5 US dollars of GDP)

• 16,000 leisure and hospitality jobs were lost

• 23,000 government jobs were added (hello federal government, glad to see you have never ending pockets)

A total of 132,000 goods producing jobs were lost (higher paying jobs), and for the fourth time this year service sector jobs were lost. Government, the last pace one wants to see jobs, added 23,000 jobs or the service sector would have contracted more. Note: some of the above categories overlap as shown in the preceding chart, so do not attempt to total them up.

Once again it was an extremely weak jobs report. And once again the Birth/Death Model assumptions are absurd. The birth/death adjustments have been in deep outer space every month this year except for January and July.

(Mark's comments: Seriously, I cannot even make a comment here anymore in between tears of laughter -- somehow the US government thinks in a historic slowdown in construction that new businesses too small to measure created 7K construction jobs. Even though their official statistics show 49,000 were lost in the companies that were large enough to measure. Even better, in a historic era of financial dislocation 13K financial jobs were created. Miracles never cease. The only "good" thing is, unlike earlier in the year when they were creating 150-250K new jobs out of thin air, they only created 70K jobs out of thin air this time - progress!)

Every month I say the same nearly the same thing. The only difference is the numbers change slightly. Here it is again: The BLS should be embarrassed to report this data.

Repeating what I have been saying for months now, virtually no one can possibly believe this data. The data is so bad, I doubt those at the BLS even believe it.

But that is what their model says so that is what they report.

There is simply no way in a real estate crash that net new construction businesses are added.

Note that are there net new professional and business services when mortgage and financial activity is collapsing. A quick check on the Mortgage Lender Implode-O-Meter shows that 300 Major US lending operations have imploded.

Table A-12

Table A-12 is where one can find a better approximation of what the unemployment rate really is. Let's take a look (click to enlarge)

The official unemployment rate is 6.5%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

It reflects how unemployment feels to the average Joe on the street.

U-6 is 11.8%. Note that it was 8.4% a year ago. Both U-6 and U-3 (the so called "official" unemployment number) are poised to rise further. And as noted earlier, my 6% target by the end of the year for the official number was reached in August. (U-6 is the gray line we see above in the Shadowstats.com chart - this is as Mish says, what it feels like to normal folks and I'd argue the blue line is even more representative since it mirrors how statistics used to be shown to Americans pre early 90s - again U-6 uses such fiction as 100s of thousands of jobs created in birth/death model etc)

Again, the stock market is not the economy. This post is about the reality of what many Americans are facing, and I'd argue most blog readers are of income strata that have been "more" sheltered than what Average Joe in America is trying to live through. It is still relatively easier to get an accountant job than a construction job, etc. Combine this data with a decade now where median wages for many have not kept up with inflation and you see why this is a true threat to living standards for many. And why we are not going to be in any recovery mode anytime soon.

Now the stock market will continously try to anticipate an imminent turnaround but I'm finally starting to hear some sensible reality from some of the Kool Aid bulls in various media outlets. They still are far more bullish than I am; but at least they are not spouting the same level of nonsense they were even 6 months ago. If you are too young to have been aware of it, and choose not to read up on it - go ask your parents how the '70s to very early '80s were and then prepare for it. We're heading there; I believe a new round of panic will ensue as states face reality in their budgets for fiscal summer 09 to summer 10. I believe the federal government will be "bailing out" states - but we're going to see service cutbacks (i.e. jobs) of a very large scale in many states. We've outlined this many times over the past year and a quarter - I am only now seeing this seep into consciousness of some media. This along with the personal bankruptcy wave of 2009 will be next year's twin crisis. Yet another reason I have to look away when the Kool Aid folk scream that the U.S. got into trouble first so will rebound first. That's caledl first in, first out in accounting land. Unfortunately the U.S. economy is not a balance sheet.

So based on what I wrote about, one should just close up shop and not be in the market for at least 18 months. But again, the stock market is not the economy and there have to be some ways to make money - always. How? I'm working on that part ;) But first I need all these hedge funds to kill off each other with their computer models, and after that great cleansing is over with we might have a playing field that makes a little sense. Until then, we like a hefty portion of cash.

Comments

[Steven Hansen:]

i have to disagree with you on one point, i think the economists at the BLS actually believe the crap they put out. they are paid to be obtuse.

the scary thing about the economic conditions today are the very negative trend lines, and the speed we are traveling downward. the economy is like this very big flywheel - once a motion is started, it is hard to stop or alter.

2008 Nov 08 12:54 AM

[Moon Kil Woong:]

The government has distorted unemployment and inflation so much they no longer can deciper anything from it. The sad thing is, they purposely did this to hide inflation and hide unemployment to make the politicians look good. It is shameful.

If you add the 1% of people in jail you can up unemployment more. In fact, they should just take total working age people and find out how many are not working. That would clearly reflect the impact of less people working regardless of if they want to work, fill out unemployment benefits, are unable to work, etc. Why they don't work doesn't matter to the economy. The fact they don't bring in bacon to spend and/or uses public money to survive is what impacts the economy regarless of any "causes".

By the way, the most costly waste of national resources is rich people who don't work. They consume a lot but don't contribute to goods or services. I don't hear people screaming about that. We should get over not counting unemployed because they don't or can't keep on unemployment rolls.

2008 Nov 08 05:06 AM

[john s. gordon:]

the phenomenon of 'overqualified for any known job' has been with us for a long time - like since 1970.

persons of working age who have given up looking because no jobs exist are 'not counted as unemployed'.

the 'gypsy work force' (i.e., pensionless work under short-term government contracts) has also been with us for a long time (like since 1962).
> jack

2008 Nov 08 08:05 AM

[Michigan Mama:]

Wow. Thanks for saying it so well.

We can't sustain an economy walking dogs and cutting hair; we have to MAKE STUFF. This country desperately needs a national policy on manufacturing and industry. In a future post would you consider deconstructing how "worker productivity" is quantified and spun by the stat masters?

2008 Nov 08 08:19 AM

[Stephen Met...:]

When you start adding the discouraged, no longer looking to the unemployment numbers, that is when I bow out of the article. Impossible to measure accurately and even if such numbers were, they largely affect transient workers (i.e., in and out of the workforce as a work pattern), and so it would be entirely inappropriate to report these in the base unemployment figures. The whole tone of your article seems to be trying to set the stage for some great uprising by the angry masses. Hopefully, your critical perspective remains intact when the messiah ascends his throne.

2008 Nov 08 08:19 AM

[john s. gordon:]

remember the famous south sea island where everyone earned a living by taking in other peoples' washing?
that's us in 2009.
> jack

2008 Nov 08 08:27 AM

[Worldtravel...:]

I believe the unemployment numbers are over stated because there are 70,000/ month baby boomers that are retiring early and some how wind up in these statistics. "Boomer" retirements are up over 100%, year over year.. That said it would be interesting to find out what percentage of the "statistically unemployed" are previously retired baby boomers.

2008 Nov 08 08:38 AM

[Dr. O:]

Excellent submission. First rate.

2008 Nov 08 08:46 AM

[sec2709:]

Nay, Nay.....Our government (politicians that are in positions paid by our tax dollars and supposed to be conducting the "will of the people") have always told us what they wanted us to believe. Unfortunately, majority of citizens do not exercise the ability to think for themselves, do reseach, look at their everyday obvious fact of living, and follow like sheep,( "or take advantage of the "free for nothing mentality".) The minority of middle class tax payers have always financed the "sheep", but now that the "boomers" are having to re-think retirement, (due to all things beyond their control), it certainly makes me wonder who's going to carry the weight for the future years! As someone wrote in another article, this is not the US our forefathers built! Scary to think how this will all end!


On Nov 08 12:54 AM The hand wrote:

> i have to disagree with you on one point, i think the economists
> at the BLS actually believe the crap they put out. they are paid
> to be obtuse.
>
> the scary thing about the economic conditions today are the very
> negative trend lines, and the speed we are traveling downward. the
> economy is like this very big flywheel - once a motion is started,
> it is hard to stop or alter.

2008 Nov 08 08:54 AM

[Ames Tiedeman:]

We may be headed to 15% unemployment. I can only laugh when experts on tv suggest by mid 2009 hiring will begin again. Not a chance. When a credit bubble bursts it is a 10 year ordeal of pain.

2008 Nov 08 09:26 AM

[vbierschwale:]

Great article.
As one of those that has just about given up, I have always suspected that the numbers were closer to 20%.

Another story that the media and our government likes to tell is the one where the people who's jobs were offshored will find similar or better paying jobs.

I'm here to tell you that this is flat out wrong and I've posted my results in an articled titled "Your wages do matter" at my web site at www.KeepAmericaAtWork....

I believe you will see from those figures that we are rapidly reducing the amount of taxable revenue to run our country which will give our leaders no alternative but to substantially raise taxes.

I also have posted a short video titled "The Sky is Falling" under the key concepts menu that shows how all democratic societies have been transferring their wealth to non democratic societies by offshoring their work and purchasing their fuel and if this isnt stopped quickly and reversed, democracy will be bankrupt in the not too distant future and this is what I believe is the real problem behind the current global crisis.

Regards,

Virgil Bierschwale
www.KeepAmericaAtWork....

2008 Nov 08 09:31 AM

[A Hoodbhoy:]

How about conducting independant national polls to get more realistic unemployment data. A properly designed poll that counts "discouraged potential workers" should be very easy to implement. We need to get several independant polling organizations to get this project going.

2008 Nov 08 09:46 AM

[notsosmart:]

the dumb-dumber sheeples are not interested in real or phony statistics.they want to know yesterdays sport scores.they dont care about phony govt. statements about anything as long as they can swill beer,fill the stadiums(like the romans in the coliseum).they get hung up on abortion,same sex marriage,stem cell research, etc. while they get fleeced by the pols & religious leaders who love this."mission accomplished" must be busy making out his pardon list for his cronies.dont be surprised by the continued downhill slide of this once great nation.we produce almost nothing except phony rated AAA worthless paper thats now all over the world.sad

2008 Nov 08 09:57 AM

[Gigi-1:]

Please write your Congress man/woman, Senators, President, and tell them to get off their butts and start addressing theses problems. We can not wait till the end of January to start to fix these problems.

We need an UNITED AMERICA but the congress and senator are still fighting among themselves and leaving the American People out to dry.

These unemployment numbers are nothing if we allow the Auto Industry to die. We need to support the Auto Industry with loans, stock purchase what ever. This will keep the business afloat while they work on the mess the Banking community has put America and the World in.

We need to see more support for AMERICAN PRODUCTS like we saw in the 70's. We need the 700 B to stop going to the banks. Scream to the current administration to start helping Main street. If main street is doing good so will the stock market.

We need to stop shipping all jobs off to other countries we need to create more manufacturing jobs. Remember WWII, if we have no infrastructure for manufacturing what will we do if there is another great war. History repeats itself as we see with this recession. There will be no plant to retool. There will be more wars are we going to ask the Chinese to make us some tanks, airplanes and weapons?

Soon we will have no engineers. We will have no people in this country who know how to build anything, just service jobs. We can not survive if we have no Manufacturing Jobs.

BUY AMERICAN, WE NEED TO HELP OUR AUTO INDUSTRY!

2008 Nov 08 10:16 AM

[David in En...:]

I just hope you Americans, and lost-n-space in particular, remember that it was American protectionism that globalised and magnified the 'great' depression. It took WWII for us to recover from that one.

2008 Nov 08 10:30 AM

[notmuchhope:]

I really don't see this trend changing until we reach a level where American workers will be paid the same as workers in India, China, and the rest of the world. Employment, much like water, will try to seek a level state. In a global economy this will not happen until American worker wages fall and wages in the other countries rise to be approximately the same level.
Companies will continue to offshore American jobs where they can get away with it in an effort to maximize profit while minimizing costs. This is what business is supposed to do. While this is painful for American workers, I'm not sure you can fault the company logic. Besides, if you can raise the wages in places like China and India, and then con them into believing they NEED the junk you are producing (as they have done in this country), you will have a much larger population buying your product and thus increasing your sales.
We have all contributed to this trend as well. How many of us would be willing to buy a more expensive American made product when we can get the equivalent product made in China for half the price? Not many.
Manufacturing jobs are only the first leg of the new world order. As the masses in other countries become more educated, this pattern will extend to other types of jobs as well.
Meanwhile, the rich will get richer, and the middle class will get poorer. Welcome to the global economy.

2008 Nov 08 10:33 AM

[John Lounsbury:]

If everything we previously believed real is melting away, all we have left is hope. Hope not acted upon is wasted, so lets get to work.

I agree that growing health care and larger government costs are a problem, but the size of these is not my largest concern. The talk about larger government vs. smaller government misses the most important factor: government efficiency. An efficient government creates private sector productivity. An inefficient government steals from private sector productivity.

If we run deficits to fight unnecessary wars or perpetuate bureaucracy, this is waste and will destroy us. If we run deficits to support the creation of tools of production, this is investment and we will build a future. Tools of production? Try domestic energy technology, electrical grid and storage infrastructure, transportation infrastructure, improved education, etc.

This is an econo-political statement and I approve this message.

2008 Nov 08 10:37 AM

[Joyful Alte...:]

Good point, Constructe, about all the imprisoned potheads not being counted among the unemployed.

I want to point out how Reagan solved 10% unemployment in the early 1980s: Previously, all those in the military were in a separate category, not included in either the employed or the unemployed, like full-time students old enough to work. Reagan declared all the millions in the military to be ordinary members of the workforce who had jobs, and Voila! The official unemployment rate dropped under 9%. This bureaucratic move was little noted then or since, but I was working in that field at the time and naive enough to be shocked.

I don't know the particulars of what's been going on since then, other than that underemployment has been pernicious at all levels for decades.

2008 Nov 08 11:04 AM

[panocha man:]

If only we could punish the people who voted for Bush by taking their jobs and giving them to those that voted Democrat. i predicted in early 2000 that we would get bookend recessions , one before Clinton and IF BUSH WAS ELECTED ANOTHER RECESSION 2001 recession wasn't enough he wanted to go down in history as CREATING the NEXT DEPRESSION, HE SUCCEEDED. HE RAN A SPORTS TEAM INTO THE GROUND, WHAT DID PEOPLE EXPECT HE WOULD DO TO THE AMERICAN ECONOMY..FIRE ALL BUSHIES YOU DESERVE IT. BUSH should be EXILED to IRAQ ,during his presidency he cared more about money to rebuild IRAQ than to rebuild the U S.

2008 Nov 08 12:07 PM

[Dr.Jackpot:]

Put your effort where your mouth is. Start by making toasters. Get an embargo on imported toasters. Next TV sets. Next furniture and textiles. Build it little by little. In 10 years we'll be back where we were 40 years ago. Oh yes-------NO UNIONS---sorry.

2008 Nov 08 12:23 PM

[bones33:]

Maybe Hollywood can start a reality show about being unemployed and homeless.

2008 Nov 08 12:23 PM

[john s. gordon:]

the sports team was a fiasco but also, how many stockholders of harken energy lost their $ while boy george w was playing boy director.
> jack

2008 Nov 08 02:06 PM

[john s. gordon:]

lounsbury: i approve your message.
> jack

2008 Nov 08 02:08 PM

[john s. gordon:]

david/england: hoobert heever's 1930 depression ended when adolf invaded poland & england (having allowed its industrial base to wither for 20 yrs) needed war materiel pronto. this allowed factories to reopen & people to be employed again, creating a warm base which came in handy when the japs port arthured us in 1941 (yes they had done it to the russians in 1904).
> jack

2008 Nov 08 02:15 PM

[Makes Sense:]

I'm weeping huge crocodile tears about those who have given up looking for work. And for those that are sitting around waiting for an offer that is not an insult to their lofty skill sets and minimum salary requirements. I agonize over those poor felons sitting in jail not being granted the basic human dignity of being included among the unemployed. I burn with outrage over all those military personnel -- and other government employees -- being considered employed, skewing the percentages. Come to think of it, they are just like the felons: they consume but they can hardly be said to produce what they consume, unlike the working stiffs of the private economy. Come to think of it some more, I think I'll start worrying about those who _are_ employed in the private economy: they are shouldering the burden of production for that huge leisure class Trader Mark wants included in the unemployment figures.

Hey, I've got an idea! If you consider yourself un- or under-employed, look around for unmet needs and figure out a way to meet them. Presto -- you're employed.

I would like to remind everyone of the iron law of incentives: If you want more of something (e.g. unemployment), subsidize it. If you want less of something (e.g. employment), tax it. Doesn't that suggest something to you? That's right, slash or repeal all taxes on employment: income tax, FICA, corporate income tax, etc. Of course then you will have to cut government consumption by transferring many government 'workers' to the private economy but just think what that means: all those consumers now become producers. I see a huge surge in employment on the horizon, don't you?

2008 Nov 08 03:00 PM

[ZgartZ:]

Great report but maybe one factor you could add is the number of election oriented "jobs" that terminated on November 5 and the effect that has had over the past many months.
Canada employment numbers were released on Friday also. At least they tempered the rise in jobs - yes rise - by saying 40,000 election jobs kept the real economy rate lower than it otherwise would have been.
In the USA, it looks like about 400,000 "employed" folks will be heading for the UI office in November as most stats shown for Canada can be multiplied by 10 for the USA.

2008 Nov 08 04:39 PM

[Bobco23:]

notmuchhope, your post is the most profound of the day. We are indeed in a new order and root cause lies much deeper than mis-reported unemployment numbers, big government, or (for those who insist on ranting), George Bush. The shift in global power has some similarities to the fall of the British economy beginning in the late 1800s. We have created a competetive world that has successfully challenged us. The future will be either a continually diminishing standard of living or a radical new approach that the entire county embraces as a new economic culture. Bet on the former.

It certainly is sad to see my country fail, but after I get over reality, I (and you) having some capital left, need to consider how to prosper in this new paradigm.

2008 Nov 08 09:54 PM

[a believer:]

This article reads like a conspiracy theory piece aimed at those 'evil BLS staffers.' They have their models and you don't like what they say. Who cares?

It makes perfect sense that government and healthcare should add jobs, government due to the elections, healthcare a lagging indicator of the ageing Baby-Boomers. Both of these are virtually recession-proof industries.

As I read through these posts I sense alot of anger and depression. I suspect alot of people have lost money in stocks in the past year. Many have lost jobs.

But we still make alot of great stuff in this country, we are resource-rich, we have good crops, we are not in a famine or drought. People still need goods and services, and there is a large older generation that will soon need alot more goods and services from their youngsters. We have a government that responds to the people, based on a great Constitution. We don't have a million percent hyperinflation (think Zimbabwe). We have freedom of association and freedom of religion. We are having alot of pain right now with the credit crisis, and as a result people are being forced to save rather than spend, which is good. You're focusing on the negative when there is alot of good coming out of the current situation:

People are now being forced to offer real goods and services in return for money (good!)

People are learning to distrust banks and the financial services industry (good!)

People are seeing that the stock markets are still way over-valued (good!)

People are finally being forced to save their money (good!)

People are realizing that their houses are not banks (good!)

Alot of young people are living with their parents alot longer. This is good for families, and is also the way it has been throughout history.

2008 Nov 08 09:55 PM

[Homer II:]

On Nov 08 10:16 AM lost-n-space wrote:
...
> These unemployment numbers are nothing if we allow the Auto Industry
> to die. We need to support the Auto Industry with loans, stock purchase
> what ever. This will keep the business afloat while they work on
> the mess the Banking community has put America and the World in.
>
...
> BUY AMERICAN, WE NEED TO HELP OUR AUTO INDUSTRY!

Why would we want to keep an auto industry alive, who: 1) builds vehicles we do not want. 2) has a unionized workforce who have obscene hourly wage scales for unskilled labor and 3) want obscene benefits for life??? I say, let all the GMs, FORDs, and Chryslers sink or swim. We already have local plants owned by Toyota, Honda, and Nissan to provide us with vehicles we need.

Unions are a cancer on this society.. the sooner they all are driven out of our workplaces, governments, the better we will all become.

2008 Nov 09 02:26 AM

[ttime:]

All the social security numbers that pay into the system are employed. The census data indicates all the eligible number of people that are ready to work. The Unemployment Number should be easy to work out without expensive models that are deployed to hide true numbers. At least they should state this number every month and then do all the shenanigans till their hearts content

2008 Nov 09 09:32 AM

[john s. gordon:]

homer: unions exist for the purpose of correcting/minimizing management abuses, of which there have been plenty during the last 150 yrs.

however there is no corresponding mechanism for correcting union abuses, other than the company goes out of business as a result of losing market share. some yrs ago i worked for a company in new jersey, the union had the factory floor tied up in knots so that no work could be accomplished. i voted with my feet.
> jack

2008 Nov 09 12:29 PM

[jkmac:]

More democratic BS than you can shake a stick at, whine, snivvel, and bitch. While you wait for someone else to to do something. Get off your fat lazy asses and accomplish something. That's what America has always been about, , til now. Ponacha boy has it all figured out, "it's Bushs' fault
gee, , how original. Not to worry, the great Messiah will fix it all, , & when
little or nothing happens after four years, , , it's all Bushs' fault - - Whine Snivvel, Bitch, , ,

2008 Nov 09 01:13 PM

[Suziclue:]

Pray to the lord that our economy recovers as more and more middle class workers will be out of a home this coming year! Prices keep declining and jobs keep declining. Look at the trend, it's crazy:

www.homepricetrend.com

2008 Nov 10 01:09 AM

[takes_money...:]

I agree with homer, attempting to keep alive suffering American industries by "buying american" is pointless. Although unions have played a pivotal role in improving the quality of the American workplace (almost every job today owes something to union efforts), they also play a role in finding non-educated workers extraordinarily high salaries in relatively mundane tasks. The outsourcing of labor to cheaper marketplaces is an inevitable and natural mechanism of capitalism.
To all those who say the globalization of the economy means that only the rich will get richer, I say you are all provided with an opportunity to exercise an extraordinarily simple solution: get rich. The system of stock trading is the most powerful yet least understood wealth generating device known to man. Investing even a fraction of a "poor union man's" salary into both foreign manufacturers (e.g. china) and american stocks (apple, boeing, etc.) can produce life-changing wealth in a suprisingly short amount of time. If every american had just 5 shares of Exxon Mobil stock when they generated their record $40 billion earnings, stimulus checks would be unnecessary.
Our nation, which is seen by many (albeit incorrectly) to be headed on a downward spiral was found by a small group of wealthy men on a principle that all citizens have the opportunity to become wealthy. It's time to spend some of that big union salary on savings for the future, not a new boat. It's time to spend some of that big union salary on college tuition for your children, not a trip to disney world three times a year for your children. A college education from an American university is a GLOBALLY sought product and is by far our most valuable commodity, more so than any American car, sofa, or TV will ever be. It's time for Americans to transition from a mundane colony of worker ants to the educated and well rounded people that they can be. America will (read) NEVER regain it's throne as King of the manufacturing economies, but our power now resides in our ability to control the flow of money to cash-hungry corporations here and abroad through stock, options, and commodity exchanges.
To all those reading who say "But college is too expensive, and why would we invest in the stock market when its in shambles, like it is now?" I say yes, college is expensive, and no, you don't understand basic economics. Now is the greatest opportunity that you or I will ever have to begin investing. Prices all around are at incredible lows. A few dollars invested now will some years from now become a great sum of wealth, more than capable of providing for our lifestyle needs. Forget the herd mentality of those Wall Street "villains" whom you so poorly understand. Invest in corporations such as General Electric or Verizon Wireless today, and you are more likely to be struck by lightning than to lose money in the long run. A penny saved is a penny earned, and a penny invested intelligently is ten pennies earned. In this time of feeble-mindedness, it seems that basic tenets such as these are more important than ever.
To all those ignorant cynics who say "only the rich get richer," I say maybe it's time that we Americans explore the logical American solution: get rich.

2008 Nov 10 04:25 AM

[Little G:]

Iraq has not been rebuilt. that is a myth. if 2 billion a week was going to iraq it would not be a sh*t heap with 70-80% people without drinking water. All that cash has not left USA soil and has gone to defence companies and other war profiteers!!
Think about it.


On Nov 08 12:07 PM panocha man wrote:

> If only we could punish the people who voted for Bush by taking their
> jobs and giving them to those that voted Democrat. i predicted in
> early 2000 that we would get bookend recessions , one before Clinton
> and IF BUSH WAS ELECTED ANOTHER RECESSION 2001 recession wasn't enough
> he wanted to go down in history as CREATING the NEXT DEPRESSION,
> HE SUCCEEDED. HE RAN A SPORTS TEAM INTO THE GROUND, WHAT DID PEOPLE
> EXPECT HE WOULD DO TO THE AMERICAN ECONOMY..FIRE ALL BUSHIES YOU
> DESERVE IT. BUSH should be EXILED to IRAQ ,during his presidency
> he cared more about money to rebuild IRAQ than to rebuild the U S.

2008 Nov 10 05:16 AM

[bosun.j:]

Trader Mark:

The warning at the top of your excellent article sums up the preponderance of comments herein.

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

2008 Nov 10 05:17 AM

[Little G:]

The great American Lie.
"Anyone can get rich" = TRUE
"Everyone can get rich" = Lie
Who's going to clean, mow the lawn, empty the trash, build roads etc if everyone does the right thing and gets a good education and a good job?
Duh, the system requires uneducated and most importantly poor people so others can be rich.


On Nov 10 04:25 AM takes_money_to_make_mo... wrote:

> I agree with homer, attempting to keep alive suffering American industries
> by "buying american" is pointless. Although unions have played a
> pivotal role in improving the quality of the American workplace (almost
> every job today owes something to union efforts), they also play
> a role in finding non-educated workers extraordinarily high salaries
> in relatively mundane tasks. The outsourcing of labor to cheaper
> marketplaces is an inevitable and natural mechanism of capitalism.
>
> To all those who say the globalization of the economy means that
> only the rich will get richer, I say you are all provided with an
> opportunity to exercise an extraordinarily simple solution: get rich.
> The system of stock trading is the most powerful yet least understood
> wealth generating device known to man. Investing even a fraction
> of a "poor union man's" salary into both foreign manufacturers (e.g.
> china) and american stocks (apple, boeing, etc.) can produce life-changing
> wealth in a suprisingly short amount of time. If every american had
> just 5 shares of Exxon Mobil stock when they generated their record
> $40 billion earnings, stimulus checks would be unnecessary.
> Our nation, which is seen by many (albeit incorrectly) to be headed
> on a downward spiral was found by a small group of wealthy men on
> a principle that all citizens have the opportunity to become wealthy.
> It's time to spend some of that big union salary on savings for the
> future, not a new boat. It's time to spend some of that big union
> salary on college tuition for your children, not a trip to disney
> world three times a year for your children. A college education from
> an American university is a GLOBALLY sought product and is by far
> our most valuable commodity, more so than any American car, sofa,
> or TV will ever be. It's time for Americans to transition from a
> mundane colony of worker ants to the educated and well rounded people
> that they can be. America will (read) NEVER regain it's throne as
> King of the manufacturing economies, but our power now resides in
> our ability to control the flow of money to cash-hungry corporations
> here and abroad through stock, options, and commodity exchanges.
>
> To all those reading who say "But college is too expensive, and why
> would we invest in the stock market when its in shambles, like it
> is now?" I say yes, college is expensive, and no, you don't understand
> basic economics. Now is the greatest opportunity that you or I will
> ever have to begin investing. Prices all around are at incredible
> lows. A few dollars invested now will some years from now become
> a great sum of wealth, more than capable of providing for our lifestyle
> needs. Forget the herd mentality of those Wall Street "villains"
> whom you so poorly understand. Invest in corporations such as General
> Electric or Verizon Wireless today, and you are more likely to be
> struck by lightning than to lose money in the long run. A penny saved
> is a penny earned, and a penny invested intelligently is ten pennies
> earned. In this time of feeble-mindedness, it seems that basic tenets
> such as these are more important than ever.
> To all those ignorant cynics who say "only the rich get richer,"
> I say maybe it's time that we Americans explore the logical American
> solution: get rich.

2008 Nov 10 05:19 AM

[prudentinve...:]

We need to bring back manufacturing and real engineering, not waste resources on bailing out "financial engineering". The notion that spending the $700bn on infrastructure is bad because it won't stimulate the economy soon enough is absurd, as it implies that wasting $700bn is better than spending it on useful jobs.

Problem is that most poilcymakers are from tha "money industries", bankers, "economists", lawyers, etc, and not the actual industries that make useful things. I believe they don't even understand fundamental economics, just the hollow mantras they hear from themselves.

2008 Nov 10 07:12 AM

[ProHFAnalyst:]

Everyone knows the limitations of the 6.5% rate and the way it is computed. Even those who compute it put out a big disclaimer with it.

Some comments.

1. The usefulness of the unemployment number is to enable comparisons across countries. If you want to compare what the US puts out with the rest of the world, the number should be adjusted to include people who are taken out of the workforce number when they haven't been actively looking for a job for more than 4 weeks. That puts us at about 7.3%, and that number can then be compared to what the EU and Japan put out.
2. Including part-time worked is probably not accurate in terms of trying to measure unemployment. Firstly, there are a lot of people who hold two jobs. Myself for instance, I work full time in the day and teach one high school class twice a week as well. So I show up in the part-time statistics. Many professionals I know, lawyers, doctors, engineers, etc have some side jobs now and then, and all those show up as part-time. So to assume that all part-timers are struggling people that would jump on a full time job if so offered is incorrect. Furthermore, there is a secular trend at work here. A lot of senior citizens hold part-time jobs because they report being bored sitting at home all day (I can understand that). As the US population ages, that number should trend up fairly linearly. There is no clean way to separate out all these subgroups within the part-time work number.
3. Even the long-term unemployed number ("discouraged worker") is troublesome. Popular imagination has it that that is the car factory worker who has been fired and is desperately seeking a job but just can't find one. While that is a romantic and true vision for some fraction of the long-term number, it is not the whole picture. Take for instance all the mortgage brokers that have been fired in the last 1-2 years. They were one of the biggest additions to the workforce in the US over the last few years before the housing market fell apart. These people were bringing in large six figure salaries. Many are still unemployed. Are they really "discouraged" workers? Sure they are looking for the next job where they won't have to work so hard and make a mint at it. But they aren't even considering going to Wal-Mart to get a job or even at the local bank to be a bank teller. Again, it is impossible to strip out the voluntarily "discouraged" workers from the involuntary discouraged workers.

The upshot of this? It is just as incorrect and misleading to include every single potentially "truly" unemployed person (as does the blue line in the graph above) as it is to exclude every single potenitally "not truly" unemployed person, as do the government statistics (red line).

2008 Nov 10 11:37 AM

[Jason Rines...:]

I am glad the comments are rated here. Your comment is at the truth of the matter, unfortunately for the American worker. But the workforce is beginning to reach a form of equilibrium you mention. US workers at $12 an hour with little or no benefits show more industrial output then Chindia/Eastern Europeans. Foreign companies have also taken notice and building industrial plants here. Unionization is not protection it once was. The American citizens has two simealtanous challenges:

1) Keeping it's government honest
2) Finding ways to pay the bills and a heavy debt load

Both challenges require lengthy days of research and painful but necessary choices. This article mentions healthcare jobs which increased. Well duh, what do you think Boomers are going to spend money on, a bigger house? Travel overseas? More trinkets from decades of consumer spending to clutter there homes with? Healthcare and the promise that it is free or low cost to all has gotten out of control from corporate beurocracy and supply and demand. It will be reformed but I do not expect the $2 T number behind it to shrink, but grow from here as Boomers retire. Now government jobs create wasteful central planners whose job it is to create more wasteful central planning. The beurocrats will lose there jobs last, first will come Fed, State and Local services that support the population.


On Nov 08 10:33 AM notmuchhope wrote:

> I really don't see this trend changing until we reach a level where
> American workers will be paid the same as workers in India, China,
> and the rest of the world. Employment, much like water, will try
> to seek a level state. In a global economy this will not happen until
> American worker wages fall and wages in the other countries rise
> to be approximately the same level.
> Companies will continue to offshore American jobs where they can
> get away with it in an effort to maximize profit while minimizing
> costs. This is what business is supposed to do. While this is painful
> for American workers, I'm not sure you can fault the company logic.
> Besides, if you can raise the wages in places like China and India,
> and then con them into believing they NEED the junk you are producing
> (as they have done in this country), you will have a much larger
> population buying your product and thus increasing your sales.<br/>We
> have all contributed to this trend as well. How many of us would
> be willing to buy a more expensive American made product when we
> can get the equivalent product made in China for half the price?
> Not many.
> Manufacturing jobs are only the first leg of the new world order.
> As the masses in other countries become more educated, this pattern
> will extend to other types of jobs as well.
> Meanwhile, the rich will get richer, and the middle class will get
> poorer. Welcome to the global economy.

2008 Nov 10 02:51 PM

[takes_money...:]

You make an interesting and correct point, that the system requires uneducated and poor folk to be the base of the system. However, like I said, stock trading brings the ability to transform small amounts of wealth into great sums of it. Saving even a small amount can over time bring life changing wealth to even the lowest paid worker.

I'd also like to note your submission to the "system" which the article we originally commented cites as the harbinger of so many of our current problems. EVERY American that makes money can invest, and when done so properly life changing wealth can be created. Don't even pay attention to my comments, just go by shares of Apple for $90 a pop. When they're trading at $200 a pop some time from now, you'll be glad you did.


On Nov 10 05:19 AM Little G wrote:

> The great American Lie.
> "Anyone can get rich" = TRUE
> "Everyone can get rich" = Lie
> Who's going to clean, mow the lawn, empty the trash, build roads
> etc if everyone does the right thing and gets a good education and
> a good job?
> Duh, the system requires uneducated and most importantly poor people
> so others can be rich.
>
>
> On Nov 10 04:25 AM takes_money_to_make_mo... wrote:

2008 Nov 10 04:55 PM

[john1:]

Just more unpatriotic negativism from liberals who hate America, and the troops.

2008 Nov 10 07:58 PM

[User 265729:]

One of the first rules I learned about government statistics in Economic 101 at UCLA was...

Q: What's the unemployment rate?

A: Anything you want it to be.

2008 Nov 10 10:38 PM

[CFC:]

Is it time revisit the H-1B and related visa programs? Also, time to revisit outsourcing tax breaks for companies?

2008 Nov 11 06:40 PM

[RebelTrade:]

Very good article.

2008 Nov 26 03:39 AM

[geauxp:]

OMG- why buy american cars? They are very bad quality. Have been for years. Please wake up. This is so sad.


On Nov 08 10:16 AM Gigi-1 wrote:

> Please write your Congress man/woman, Senators, President, and tell
> them to get off their butts and start addressing theses problems.
> We can not wait till the end of January to start to fix these problems.
>
>
> We need an UNITED AMERICA but the congress and senator are still
> fighting among themselves and leaving the American People out to
> dry.
>
> These unemployment numbers are nothing if we allow the Auto Industry
> to die. We need to support the Auto Industry with loans, stock purchase
> what ever. This will keep the business afloat while they work on
> the mess the Banking community has put America and the World in.
>
>
> We need to see more support for AMERICAN PRODUCTS like we saw in
> the 70's. We need the 700 B to stop going to the banks. Scream to
> the current administration to start helping Main street. If main
> street is doing good so will the stock market.
>
> We need to stop shipping all jobs off to other countries we need
> to create more manufacturing jobs. Remember WWII, if we have no infrastructure
> for manufacturing what will we do if there is another great war.
> History repeats itself as we see with this recession. There will
> be no plant to retool. There will be more wars are we going to ask
> the Chinese to make us some tanks, airplanes and weapons?
>
> Soon we will have no engineers. We will have no people in this country
> who know how to build anything, just service jobs. We can not survive
> if we have no Manufacturing Jobs.
>
> BUY AMERICAN, WE NEED TO HELP OUR AUTO INDUSTRY!

2008 Nov 30 12:12 PM

[maria26:]

The government can't address any problems until they are officially in office, so we will have to wait until January.
I think guessing at the "reality" of the unemployment figures is futile. And using anecdotal evidence is just plain crazy. If you happen to build cars for a living, and reside in Ohio its possible everyone you know will have employment worries of some sort. If you are a dentist in Minnesota, maybe not. It is what it is. Also think about how many more people there are in the country today. In the thirties the population was a third of what it is today. So Employment has risen exponentionally. We employ 96 percent of the population. Have some faith.

Jan 07 11:29 PM

[maria26:]

The government can't address any problems until they are officially in office, so we will have to wait until January.
I think guessing at the "reality" of the unemployment figures is futile. And using anecdotal evidence is just plain crazy. If you happen to build cars for a living, and reside in Ohio its possible everyone you know will have employment worries of some sort. If you are a dentist in Minnesota, maybe not. It is what it is. Also think about how many more people there are in the country today. In the thirties the population was a third of what it is today. So Employment has risen exponentionally. We employ 96 percent of the population. Have some faith.

Jan 07 11:30 PM

[Wishthingsw...:]

Everyday is a new snow storm or should I say job. The economic news is now fantasy. Spin it, flip it, scrape it and smother it. It's all a bunch of spun BS. The market moves on lies. Our unemployment data is a joke and is grossly underestimated. I feel sorry for all of US in 2009. Oh, what a tangled web we weave, when first we practice to deceive.

Jan 28 02:53 AM

[Wishthingsw...:]

96% of the US population employed? Not even in good times. We are lucky if we really have 95% employment at anytime. Right now we are really at around 90%.

I agree with you when you say have faith. Faith is what is needed by everyone at all times. Most of all we need an economy that is free of the 10 of thousands of white collar criminals and their friends. That's what has screwed things up to this point. No blaming any particular administration as that can't be done. Criminals need to go to jail for stealing. For now they will at least lose their jobs and that is happening now.

Reality is that we will be lucky if the real unemployment rate is under 15% by the end of 2009. Lucky for sure.


On Jan 07 11:30 PM maria26 wrote:

> The government can't address any problems until they are officially
> in office, so we will have to wait until January.
> I think guessing at the "reality" of the unemployment figures is
> futile. And using anecdotal evidence is just plain crazy. If you
> happen to build cars for a living, and reside in Ohio its possible
> everyone you know will have employment worries of some sort. If you
> are a dentist in Minnesota, maybe not. It is what it is. Also think
> about how many more people there are in the country today. In the
> thirties the population was a third of what it is today. So Employment
> has risen exponentionally. We employ 96 percent of the population.
> Have some faith.

Jan 28 03:02 AM