The ‘official’ US unemployment rates pushed by number cookers may seem grim, but the real unemployment rates within the US tell a much more realistic and concerning tale.
Even recent drops in the numbers of unemployed people reported by the U.S. Labor Department were apparently too good to be true. The U.S. Bureau of Labor Statistics has admitted that the improved employment figures it recently reported were the result of a computer error, and that’s just the beginning. We’re looking at the ‘final breath’ of the economy before either collapse or reform that Anthony Gucciardi has detailed.
The Labor Department reported that the number of those applying for unemployment benefits fell by 31,000 during the first week of September. Yet just a week later a Labor Department spokesman admitted the real cause of the drop was that two states he wouldn’t identity changed their computer systems. This delayed the reporting of some claims and produced the “drop.”
The Department has finally admitted what a lot of Americans, including many economists, have long suspected: that unemployment rates are calculated in such a way as to make the economy look better than it actually is.
Why Unemployment Statistics Are Inaccurate and Unrealistic
This incident shows how inaccurate, unreliable, and unrealistic unemployment statistics really are. The statistics are unreliable because of the methodology used by the bureau. Instead of counting the number of people without jobs or those looking for work, the agency simply counts the number of applications for unemployment insurance.
That methodology is flawed because not every unemployed person applies for unemployment insurance; some people don’t qualify for it while others may have other sources of income. There are also those whose benefits have expired and persons that refuse to participate in the system.
Another big problem is that not everybody who applies for unemployment insurance is unemployed. Some people apply for it while they are still working. Others might be working off the books, say for cash tips.
The Real Unemployment Rate
Others criticize the system because it doesn’t count the underemployed. The underemployed are persons who have settled for lower paying or part-time work because that’s all they can find. An example of this might be a computer programmer that is now driving a truck.
The real unemployment rate is 14.3%, according to Forbes columnist Dan Diamond not the 7.6% touted by politicians. What these numbers mean is that claims of an economic recovery are greatly exaggerated. Perhaps the Labor Department is telling us and Wall Street what we want to hear rather than the truth.