Unemployment Rate Highly Underrated!
Here are the glossed-over facts behind today’s vaunted news about unemployment, which has kept the stock market dancing in delirium. After a year of remaining stuck above 9%, the unemployment rate dropped in November to 8.6%, and the stock market was able to sustain yesterday’s drunken stupor. What is not immediately clear in these reports is that 315,000 of these people dropped off unemployment because they gave up and stopped looking for jobs.
Getting behind the unemployment rate numbers to find the facts
The reality is that unemployment or jobless numbers look better today in large part simply because people have given up! Once they give up, they are no longer counted. The country still has a backlog of more than 13 million unemployed people, which puts the real number of unemployed and under-employed people (those who want full-time work but can only find part-time) at 15.6%.
The jobless rate counts only people who are actively looking for jobs, and the umemployment rate counts only people who are actively looking and receiving unemployment checks. It does not count those who fall off the roll because their benefits expire or because they stop looking for jobs. The jobless rate has been at its highest levels longer than any period since it began being calculated in 1948. The average time all the people receiving unemployment checks have been on unemployment is 41 weeks, which is also the longest average in the nation’s history.
315,000 of those people finally called it quits on their job search last week, taking them out of the unemployment rate and jobless figures. They were probably the ones who were far above the 41-week average time spent looking for work. They just gave up!
Possible enormous unemployment rate drop in January 2012!
That heading sounds like great news. January’s unemployment rate will appear miraculously better than today’s “good news” if unemployment benefits are not extended once again by congress. 1.8 million people will no longer receive benefits and will fall off the unemployment roll overnight if congress does not renew the program extensions by the end of the year. Yes, we’ll have a sudden 1.8 million drop in the unemployment rate, and the stock market can, then, celebrate again, for surely the economy must be robust! (When great-sounding news is bad news it would be better if there were no news.)
Getting back to our employment reality check, here’s the bottom line in November’s figures: Only 120,000 of those who left the official unemployment rate numbers left because of new jobs being created. AND, of those 120,000 new jobs in November, HALF were seasonal jobs in retail. We always have a boost in jobs in November as retailers add swarms of temporary employees for the holiday shopping season. So, half of the actual boost to employment in November will fade away during January just from the end of these seasonal jobs. In real terms, the nation added only about 60,000 jobs that will endure — not even enough to keep up with monthly population growth due to immigration!
In order to know anything, you have to read carefully between the lines of these reports to see what the total numbers really mean.
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