The Real Unemployment Rate

In any economy, no matter whether it is controlled by the government or by free markets, people need to work in order to support it. The government does not generate tax revenue by magic. There have to be people in that economy earning an income to ensure that the government continues to collect taxes. In a free market economy, the same applies because there are some services which only an organized government can supply (such as protection from extra-national threats), but there also those which the people get for themselves because of the working of the markets. In any scenario, unemployment is, at the very least, a drag on the economy, and it can be much worse. This paper examines how the unemployment rate in the United States is underreported, and how that fact effects the sluggishness of the present economy.

Whether it is high or low, the unemployment rate has proven its ability to have a strong negative impact on individual firms and organizations. As of December 2014, America’s

As of March, 2013 the U.S. National Unemployment rate was 7.6%. A total of 11.7 million people were reported as unemployed by the Bureau of Labor Statistics. This rate is improved from the height of the recent recession, where the statistic floated around 9%, but it is still not the usual 3-4% figure we are used to seeing in regular market conditions. (bls.gov, US, 2013)

The U-3 is the best known, and the most commonly used unemployment statistics from the Bureau of Labor Statistics (BLS). It calculates the U.S. unemployment rate by taking the total number of unemployed persons and dividing that figure by the total number of persons in the civilian labor force. The civilian labor force is composed of all persons above the age of sixteen, who are not serving in the military, who have employment (or who are actively seeking employment). What the BLS leaves out in the U-3 is the body of people whom they call discouraged workers. They are those who used to be included in the civilian labor force, but lost their jobs and ceased their search for new employment. The federal government’s calculation that includes our nation’s discouraged workers in the unemployment rate forms what is called the U-6. Also calculated in the U-6 are people who are working at part-time jobs but desire full-time work. Using both the U-6 and the U-3 is a far more substantial means of acknowledging our true unemployment rate.

Given the unemployed remain undocumented the published unemployment figures convey the unemployment rate has gone down. Yet at the same time the labor force has dropped since 1977. The cause of undocumented unemployed citizens’ results from the number of social security not counted on the unemployment data. According to Davis the past two decades substantially outnumbers the unemployed.

unemployed (nearly 25 percent of the workforce), and the real earnings for those still lucky

According to Livermore (2008), people who are actively looking for work but are not currently in a contractual arrangement are considered unemployed. Since the recession in 2007, unemployment has been an ongoing problem in America. Many companies were laying off thousands of employees because they could not pay them. As of September 2011, the South and the West has the highest concentration of unemployment. Nevada has the highest jobless rate, 13.4%, followed by California with 12.1% (Cooper, 2011). The collapse of the housing bubble left Nevada with high rates of unemployment. South Carolina’s unemployment rate is 11.1% and is the fourth highest in the nation (Cooper, 2011). Most people had a hard time finding work because they

In the beginning of 2012 the employment growth averaged 151,000 per month. This averaged about the same monthly growth in 201l, which was at 153,000. “Both the unemployment rate (8.3 percent) and the number of unemployed persons (12.8 million) were essentially unchanged in July.” The employment rate in 2012 for ages 16 and over was 8.3 and the rate for 25 and over was 6.9. In 2011 the rate for 16 and over was 9.1 and 25 and over was 7.8. (BLS, 2012)

According to the chart below leading up to the 2008 crisis the unemployment rate hovered right around four to six percent. This percentage is right around where we are hovering today. After analyzing the aforementioned FRED Civilian Unemployment Rate chart1 the leap in unemployment rate can be pinpointed to 2008 after the housing bubble popped. The jump was quite substantial beginning in February of 2008 at 4.9 percent and peaking in October of 2009 at 10 percent. This steep jump was caused by the companies going into debt due to the recession and having to cut expenses by laying off workers. What does the Troubled Assets Relief Program have to do with this? While at first sight in the eyes of the public TARP was extremely disliked as the public

Since the Great Recession, the economy has been "coming back" in fits and starts. Good news one month, bad news the next.

In the Wall Street Journal dated September 6th 2013, an article titled, ‘Unemployment Drops for the Wrong Reasons’ describes how unemployment has dropped in the United States based on the latest Bureau of Labor Statistics population survey. According to Izzo (2013), there was a drop in unemployment rate to 7.3% by 0.1% in August 2013. This was coupled with a drop of broader measure of unemployment by 0.3% to 13.7%. On closer scrutiny, the drop in unemployment came from wrong reasons (Izzo, 2013). The arguments in the article are that the decline in the rate of unemployment is purely due adverse factors in the US economy. The 0.1% was approximately equal to 115,000 people.

Every year, the unemployment rate is measured in the United States. The term unemployment refers to the group of people who are actively searching for work and do not have a job. Certain groups of individuals, however, are not factored into the measurement of unemployment on an annual basis. People who are under the age of sixteen, are institutionalized, or are not actively looking for a job are not added when counting unemployment. There are four major types of unemployment, and they include frictional, structural, cyclical, and seasonal.

Unemployment is one of the most serious issues that industrialised countries are facing nowadays. It is indeed an indisputable situation that unemployment rates are continuously increasing. Australian Bureau of Statistics expressed unemployment as the “Person rates of labour underutilisation underestimate the true level of labour underutilisation in Australia”(Australian Bureau of Statistics 2012d; 3). It is a situation where an individual is actively searching for job but unable to get for a period of time. Since the mid-1970s Australia’s has experienced its longest period of persistently high unemployment in its history (Mitchell, 1996). Unemployment rate is an important indicator of economy’s status. ABS is responsible for measuring unemployment

Unemployment recently has been a major problem in the United States. We have to get our abled workers back to work. Current information from the U.S. Department of Labor in October 2012 reports that the unemployment rate was at 7.9 percent. To help solve some of the problems with unemployment, we recommend that government

Janet Yellen, Federal Reserve Chair, explains that most job growth has come from food service industries and low-paying retail such as being an associate at Target or Sears. These increased job fillings make it seem that unemployment rate is low when the high paying job positions are not increasing. Yellen considers the real unemployment rate to be a more accurate representation of the current state of unemployment in the nation. As opposed to the official unemployment rate (U-3), the real unemployment rate (U-6) considers those who are marginally attached and discouraged rather than just those who have looked for a job in the past four weeks and are unemployed. In addition, the real unemployment rate looks at the part-time workers who are not satisfied with their current placement and would