Monday, April 29, 2013

The Real Unemployment Rate

I’ve been watching the unemployment figures for quite some time now, and I can’t believe how the average American is being misled.

To be truthful, you have to be naive to believe the 7.7% rate. Yet, no one really challenges it. Allow me to take a shot at it.

According to the Bureau of Labor Statistics (BLS), the seasonally adjusted official unemployment rate for February fell to an alleged four-year national low. All America watched as the White House and drive-by media congratulated itself.

Meanwhile, the Republicans quickly pointed to the U6 rate that stood at 14.3%, as the real unemployment rate.

Unfortunately, I believe both are wrong. Allow me to explain.

The BLS looks at six categories, from U-1 to U-6. Typically, the government states the unemployment rate from U-3. This rate includes people who have been unemployed but have actively looked for work during the last month. Excluded from this rate, are people who work part-time (as defined by the government as someone who worked one hour or more).

The U-6 number contains data from the U-3 rate, including part-time workers and the unemployed who have unsuccessfully looked for work in the last month. Already, you can see a huge difference.

Unfortunately, Washington has found a way to skew the numbers by not counting a very important group of people in the calculation. The worker who is on disability. They have found a way to make them invisible, and the sad part is how the number in this category is increasing.

Why should they be counted? Because they are unemployed and unable to work. Simple. Yet, because they are part of the workforce, they are not counted. And, because they are getting disability insurance instead of unemployment insurance, they're not counted. Yet, they are still unable to work. By not counting them, they have become invisible, and thereby skewing the numbers in favor of the administration.

Under Bill Clinton, welfare changed as we know it. Its intent was to push people off the welfare rolls and into jobs. He also pushed individual states to assume a much larger share of the cost of welfare. However, like all big social programs, it worked against what it was suppose to do.

Let me explain.

Each person on welfare cost the individual state. This added burden to the state financially, while it removed it from the federal government.

The states found a way around this added burden. Each person on welfare cost the state, but if you moved the person to disability, the entire financial costs moved to the Federal government. Why? Because Social Security disability insurance is fully funded by the federal government.

That means neither the U-3 or U-6 number can be fully trusted.. They’re bogus numbers.

In February the number of Americans as ‘not in the workforce’ was 89,304,000, a record high. The economic trend monitoring site InvestmentWatch concluded that the actual American unemployment is around 30%!

I’ll be the first to say that it is not possible to be exact in calculating the number since the population is not a certainty at 310,000,000. It could be more or less. Not enough data is available. However, the 7.6% rate is as bogus as it can be, and the 14.3% is only halfway to being true. My 'gut' says around 25%.

It is possible to be informed enough to realize when something smells fishy. That we can do. Look around you, a 7.6% unemployment is unrealistic. If you don't think so, you must be blind. Too many are suffering, without work or unable to find work. The average income per family has dropped.  And, we’re not even taking into consideration the college graduates who are graduating. Add them to the mix. 

People, this not a recovery, at best, it is a reversion.

It’s time to cultivate a healthy skepticism of what our government is telling us. It’s time to stop listening to the rhetoric; it’s time to get informed. The federal government will be releasing its unemployment rate for the month of March. Unfortunately, stay tune, Washington has more BS to fling at you at that time..