[ale] Off topic - And now, unemployment

[Robert Reese]

Hello Jim, Et al,

Sunday, July 11, 2010, 6:02:41 PM, you wrote:

> On Sun, Jul 11, 2010 at 5:24 PM, Greg Freemyer <greg.freemyer at gmail.com>wrote:

>> On Sun, Jul 11, 2010 at 2:04 PM, Jim Kinney <jim.kinney at gmail.com> wrote:
>> <snip>
>> > We have nearly 10% unemployment. That sounds
>> > scary. We have better than 90% employment. That's great!

>> 90% of what?


> if 10% is unemployed the rest must be employed or not looking.

...

> I'm well aware of the numbers that aren't visible, people who are no longer
> eligible for unemployment are no longer counted as "unemployed" (I think).


This is how it was explained to me in macro-economics:

It essentially is done by gathering the data from the labor departments and by cold-calling households to answer survey questions.  100% employment means that everyone that is actively seeking employment or wants to continue working is doing so, and is between a minimum and maximum age.  Those that are fully disabled, "home workers", non-working students, incarcerated people, and those that are "disgruntled" unemployed are not counted in the 100%.  In other words, if a survey answer is that the person is not looking for work and if the person is no longer receiving unemployment, that person is no longer counted in the 'unemployed' percentage -  in essence they have dropped off the eligible employee total which means that they no longer contribute to the unemployment figures.

Basically, 100% is NOT the available workforce and is only the those that are working or are seeking employment.

If we were to take a look at the number who are verifiably employed over the number of all fully abled and 'partially abled'* workers in the country then we would have a much clearer picture of the true employment figure.  I understand that number to be approximately 55% of able workers, and if we were to compare the number of verifiably employed workforce over the number of  the entire country's population, then I believe that number is somewhere around 35%.
*(a wheelchair-bound person might not be a hotel valet but certainly could do data entry equally as well as any other non-handicapped person)

Of course, these numbers don't include the self-employed person that operates under the employment radar, undocumented day laborers, drug dealers, and so forth.  If you counted them as well as the 'housewife/househusband' type individuals, then I believe you can add another 15% to those numbers.

By the way, that means one way for the unemployment rate to appear to fall is for the unemployed to stop looking for work and to stop receiving unemployment.  Example: 15,000 out of 100,000 are unemployed, looking for work, and accepting benefits.  Unemployment is 15%.  Overnight 5,000 workers lose their jobs but 11,000 drop off the unemployment benefit rolls.  The unemployment figure is now 9,000 unemployed out of 89,000.  9/89 = 10.11%    Unemployment dropped from 15% to 10% overnight!  The problem is that out of the original 100,000 people, 20,000 are not working.  Yet you don't see a 20% unemployment rate!!  It gets worse: it doesn't account for *under-employed* people.  If someone is flipping burgers at McDrool for 15 hours per week at minimum wage, they are counted as fully employed.  It doesn't matter if they were an engineer making $120,000 a year previous.

Regardless, this really means that a 10% unemployment figure is much more significant, indicating a much more severe problem, than the average American realizes.  The questions to really answer are what percentage of able workers are working and to what percentage of their highest, most efficient capacity?

Cheers,
Robert~