Why unemployment and job figures vary depending on Government statistics
Mark Twain once said, “There are lies, damn lies and statistics.”
Government statistics seems to fall somewhere between the last two. Why?
Partly because of the statistics we focus on. When the unemployment rate comes out, we always focus on U3: the proportion of the civilian labor force that is unemployed but actively seeking a job, which now shows unemployment at around 10 percent.
But U6, which the Bureau of Labor Statistics (BLS) publishes at the same time, shows unemployment nearing 18 percent. (And in Michigan, that number is nearing 25 percent.)
The reason for the difference is that U6 includes underemployed, marginally attached workers, and discouraged workers. That’s the number that people feel, not U3.
Job gains or losses are affected in a similar way. In one month alone, we “lost” 85,000 jobs, but more than 600,000 people left the workforce, according to the BLS. That’s why it feels so much worse on the street than the statistics show.
And, by the way, the statistics on the number of long-term unemployed continue to go down because people are losing their unemployment benefits — NOT because they are no longer unemployed and have found jobs.
Also, government statistics focus very little on hiring, and that’s where the big problems are now. We may be losing fewer jobs than previously, but hiring is still very slow, and that’s what people see when they are job hunting or worried they might lose their jobs.
[Excerpt of article by Robert Wiedemer, author of “Aftershock”]