Zuckerman on the Job Market and Obama

As we have had a lot of discussion here at RMG on jobs, I highly recommend taking a look at Mort Zuckerman’s piece in US News.  http://www.usnews.com/opinion/…  The article is packed with data including some that I haven’t seen before.  

Here’s an excerpt from Zuckerman explaining just how bad things are and how government unemployment statistics understate the depth of despair:

The real unemployment rate is 15 percent, measured by what is called U-6, which includes people who are working part-time on an involuntary basis. We have 4.7 million fewer jobs than the peak reached at the end of 2007. And indeed much of the improvement in jobs has been through dubious “seasonal” adjustments, such as the July seasonal bump of 377,000 jobs-the largest such adjustment for July in the past 10 years. The labor participation rate has dropped to a 30-year low, and if not for that development, the unemployment rate would be much higher.

Fewer Americans are at work today than in April 2000, although the population has grown by 31 million since then. A worker between the ages of 50 and 61 who has been unemployed for over a year has only a 9 percent chance of finding a job in the next three months. A worker who is 62 years or older and similarly unemployed has about a 6 percent chance. And 50 percent of this year’s college graduates are without jobs or are underemployed. What a waste.

It used to be that you were in the labor force if you had been looking for work some time in the last four years, but that was changed to one year in the later Clinton years. If we use that older and more reasonable standard, the unemployment rate would be at least more than one percentage point higher.

If you are on disability, you are not considered to be in the labor force either. As of April, we have added 5.5 million people to the disability rolls since the beginning of 2009, several million above the previous trend. There are now roughly 9 million people on disability. In 1992, there was one person on disability for every 35 workers. It is now about one for every 16 workers. It is hard to believe that so many people have become disabled; disability has literally become another fallback position for people out of work. If disability had stayed at the pre-recession growth rate, unemployment would be at least one percentage point higher, leading to a true unemployment rate much closer to 10 percent and perhaps significantly more.

Underemployment is still in the range of 16 percent, and that does not count people who have a job for which they are overqualified or who are making much less money because they are aren’t working in their chosen field. John Williams at Shadowstats, who uses the U.S. government methodology from 30 years ago, tells us that the U-6 unemployment rate is around 23 percent. The difference is in how you create the model. The feds keep changing the rules, and it should be no surprise that with each new rule the number of people officially counted as unemployed drops. If you can’t find a job, whether officially employed or not, you are still out of work. Far too many workers have been idle for extended periods, and it is crucial to get them back into the labor force before their skills atrophy and their earning power shrinks permanently.

I have highlighted in bold data that are not commonly mentioned in the course of discussions of  government statistics on unemployment.  And there’s plenty more to think about in the Zuckerman piece.  Read the whole thing!  

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