It is important to remember what the 8.6% rate does not report: all of the underemployed and discouraged workers as well as how the demographics associated with the aging of the baby boom generation contribute to make unemployment rate look better than it really is.
According to a study by two scholars at the American Action Forum, Ike Brannon and Matt Thoman:
- The older generation of U.S. workers (predominantly the baby boomers) are increasingly accepting early retirement or buyout packages when confronted with the choice of possible layoffs.
- There is a large number of potential young workers who have chosen not to enter the labor force due to poor prospects and instead are attending graduate school.
The combination of these two factors alone, when integrated into the more comprehensive measure of unemployment---the Demographically-Adjusted Unemployment Rate---suggests that the real unemployment rate is closer to 10% than 8.6%. Others calculate the real rate at 9.8% to 21.4% with an average of 17%.
The "take away" for The Motley Monk?
Returning to a more "natural" rate of unemployment at pre-recession levels of 5% may be the stuff of a pipe dream fueled by magical herbs, especially when all of those graduate students finally enter the jobs market.
The Motley Monk would also note that the current unemployment rate being touted by President Obama reflects many "seasonal" hirings, that is, workers hired for the Thanksgiving and Christmas holidays who are likely to be laid off sometime after inventory is taken in January. In that scenario, look for an uptick in unemployment in the February jobs report and a President with a case of persistent laryngitis.
Let the discussion begin...
To read the Brannon and Thoman report, click on the following link:
http://www.american.com/archive/2011/december/why-unemployment-is-worse-than-you-think
Employment numbers, Unemployment numbers, home sales numbers, number of foreclosures, etc. etc. are all skewed by the agenda of the presenter. These are complex, multifaceted issues.
ReplyDeleteWhen the numbers are 'adjusted' in the months following the initial article, no mention is given as to why the original numbers were published if they were to then be adjusted. Obviously, the process is not complete when the initial numbers are spun.
If 2 homes sold last year and 4 have sold this year.... Home Sales have doubled since last year!
Foreclosures have slowed to less than 50% from a year ago... Great, now that so many have lost their home - what else would we expect?
Employment numbers do not reflect the 'under employed' 'Under employed' do not have the same earning capacity they once had and usually have downsized to accommodate the change. Therefore, just because a person has a 'job' the impact of that job. on the economy, is not the same as their previous job.
Neither political party wants to acknowledge the true state of the economy. The reality could awaken those, lulled into popular belief of recovery, into actually throwing most of the bums out of DC
I would like someone to tell me the last member of the House or Senate who:
-took a permanent pay cut
-was told their pension plan was converted to an annuity
-future retirement savings would be their responsibility through a 401K or IRA
-had no choice of healthcare and had to participate in a HMO
-went on COBRA when voted out of office
-didn't receive special auto license plates that basically told the police.. hands off
-paid their own postage
-cut the size of their staff
-cut the budget of their staff
-avoided K Street
-avoided 'paid, information junkets'
-didn't arrange government jobs for family
The list goes on an on....
Recession is when your neighbor looses a job
Depression is when you loose a job
Recovery is when term-limits are imposed and they all loose their jobs....
How many people in the Senate or House didn't buy Christmas presents for family because they didn't get paid?
How many worry about their daily job performance - except how it impacts contributions to get them re-elected?
How many get re-elected even though they can pass a budget, much less balance it?
How many leave the House and Senate and work for a think-tank, connected law firm, advocacy group or should I call it for what it is... a lobby??
Look behind the numbers, if you dare....