Over the past few days, we’ve been discussing job creation and the various ways to think about unemployment. This has been a long standing theme around here (Augmented unemployment rate, as well as the NILF issue — Not In Labor Force).
See the list at bottom of BLS Alternative Measures of Labor Underutilization.
Since a picture is worth a 1,000 words, I’d like to point to some recent work by Prof Andrew A. Samwick of Dartmouth. Over at Vox, Baby, the good professor posted a terrific chart showing these different measures of unemployment:
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U3 Unemployment Trends (%), plus U4, U5 , U6
Source: Andrew Samwick
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I see two significant factors about these collectively measures of Unemployment:
First, the official (U3) measure, so favored by politicians, understates "real world" unemployment by about a third.
Second, and perhaps most important, since late 2006/early 2007, unemployment levels have bottomed and are now trending higher. And, we appear to be in the early parts of that cycle . . .
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Sources:
What the Unemployment Rate Misses
Andrew A. Samwick
Vox, Baby March 05, 2008
http://voxbaby.blogspot.com/2008/03/what-unemployment-rate-misses.html
Table A-12: Alternative measures of labor underutilization
BLS
http://www.bls.gov/news.release/empsit.t12.htm
BLS Alternative Measures of
Labor Underutilization
U1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
U2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force
U3 Total unemployed, as a percent of the civilian labor force (the official unemployment rate)
U4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
U5
Total unemployed, plus discouraged workers, plus all other
marginally attached workers as a percent of the civilian labor force
plus all marginally attached workers
U6 Total unemployed, plus
all marginally attached workers, plus total employed part time for
economic reasons, as a percent of the civilian labor force plus all
marginally attached workers (the "real world" unemployment rate)
What I find significant is that the measures all seem to track each other, trend-wise.
“First, the official (U3) measure, so favored by politicians, understates “real world” unemployment by about a third.”
The remarkable thing about this measure is the abject servility of the media to report it uncritically, without any qualifiers. Has the MSM become so beholden to the politicians that they don’t even dare questioning what they favor?
Great chart. The u-6 is very likely a more accurate reflection of employment conditions.
This data is great, but the chart sucks.
What we need are stacked bars with real numbers attached, so we can acually see that, as I think is the case but I am guessing, that the categories trend in the same percentages.
If that is the case, then it proves our economy is quite fluid and adaptable, even as it experiences increases in unemployment/less than full employment.
See this chart at bottom of page:
A Closer Look at Unemployment
To quote George Carlin: “It’s bullshit. And it’s bad for you.”
It’s just the right phrase for so many things.
Well, now that I know that NILF means Not in Labor Force, I guess I finally now know what that mysterious MILF acronym must mean — Moms in Labor Force!!
Adjusted for inflation, a picture is now worth 12,725 words.