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Is the Real Unemployment Rate 22.6%?

Jobless claims are down and hiring is up by recent measures, but some economists say the American unemployment picture is far bleaker than those numbers indicate.

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The number of U.S. workers filing new applications for unemployment benefits fell to the lowest level in nine months, according to the U.S. Labor Department Thursday; initial jobless claims dropped by 23,000 to a seasonally adjusted 381,000 in the week ended Dec. 3. As reported Friday, U.S. unemployment rate fell to its lowest level in 32 months in November with unemployment hitting 8.6%, falling below 9% for the first time in six months, the Labor Department said.

But if all discouraged workers are included, the 8.6% figure rises. Including “marginally attached workers” – those who are discouraged – was 15.6% in November, according to government data. John Williams, a statistician and economist, says the real unemployment figure including all discouraged workers who stopped looking for work is closer to a staggering 22.6% — nearly a quarter of the potential workforce. Since 1994, the government data defines discouraged workers as those who have been looking for work within the last year. Williams includes all discouraged workers. “I know plenty of people who have been discouraged for more than a year,” he says.

What’s more, online help wanted advertisements are also weak in all four U.S. regions, according to The Conference Board’s own index. Online job vacancies fell 76,200 in November to 3,857,200, the sixth consecutive monthly loss. The supply/demand rate stands at 3.53, indicating there were 3.5 unemployed people for every online job opening in October. Nationally, there are 10 million more unemployed than there are advertised openings, according to the Conference Board. June Shelp, vice-president at The Conference Board, said the decline in demand for jobs “is not good news for the labor market.”

To be sure, the Bureau of Labor Statistics releases a range of statistics and says it attempts to give the clearest picture possible. Gary Steinberg, a spokesman for the Bureau of Labor Statistics, says, “We don’t claim that any one number is more accurate than the other. Each one represents a different universe. Everyone is accounted for – it just depends on which group they are in.” He says the 8.6% unemployment rate in November represents the over 13 million unemployed and actively looking for work, and it has fallen 1.7 million since November 2010, but has nearly doubled since November 2006.

Others suggest looking at the number of people who are working. The employment rate – those with jobs as a percentage of the population – gives a more accurate picture, says Patrick O’Keefe, director of economic research at J.H. Cohn consultants in Roseland, N.J. It was 58.5% in November, down from an average of 63% in the year prior to the recession.  O’Keefe, who is a former deputy assistant secretary in the U.S. Department of Labor and a former deputy director of the National Commission for Employment Policy, says, “The Bureau of Labor Statistics refers to it as the employment population ratio, a measure of the utilization of our human potential – those of us who are eligible to work.”


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    • We can always expect unemployed numbers reported by government officials to be at least triple what they report as some say it being an election year, those in office want reelected. No truth tellers in Washington. Thanks to those telling us the truth.

    • When the Bureau of Labor and Statistics states “Everyone is accounted for …” why is this question never asked: If everyone is accounted for what is the number of unemployed persons who are still not working, and are no longer able to collect Unemployment Insurance?
      To me it’s just one more pile we have to shovel – especially when we all know statistics are eaily manipulated to fit the message.

      It would be wonderul if just one investigative reporter could go that extra mile. Otherwise, it’s just more of the same.
      Thank you

    • U3 is not an accurate indicator of unemployment. There are many people who want a job but they do not qualify for benefits and they are not counted! Another way to look at unemployment picture is to count who is actually employed:

    • Of course the government wants you to believe the unemployment figures are getting better and better every month. There is an election coming up pretty soon and if everyone knew the true numbers and how terrible the economy (and inflation) really are they’d be throwing all of congress and Obama out on their butts. They should all be FIRED(that means voted out of office).

    • Anyone with half a brain could have figured this one out. This “Transparent Administration is all just “Smoke & Mirrors” to accomplish a” Socialist Agenda”. Obama is an advocate of the “Alinsky Doctrine” which the MSM and Dems also don’t like to talk about and ignore. Don’t talk about Reagan! He pulled everyone into prosperity after Carter almost destroyed us. It’s the corrupt politicians and bankers both times who put us where we are today. Don’t forget you Dems that your “Buddy ” Clinton signed into law the legislation which collapsed these markets today but all of always seem to forget that. Hmmmmm.

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