The Real Unemployment Rate Is Worse Than You Think

The March jobs numbers, released by the Bureau of Labor Statistics on Friday, were so dismal that Austan Goolsbee, former chairman of President Obama's Council of Economic Advisers, called them "a punch to the gut."

The latest jobs report also shows how misleading the unemployment numbers can be. The jobless rate dipped to 7.6 percent, but only 88,000 jobs were created. That's because half a million people dropped out of the labor force.

What would the real unemployment rate be then, if we were to include everyone who is actually unemployed? The Americans who spent so long looking for work that they stopped even trying, and moved back in with their parents. People who don't have the skills to get any job in their area other than manual labor, but with a bad back or some other injury, they just go on disability instead. In other words, people who would take a job if offered.

What would the real unemployment rate be, if we tried to include some of those others who don't fit into its "unemployed" check box. How many Americans are hardly working, or aren't working at all, or would love to take a full-time job?

AOL Jobs did a calculation and came up with 11.7 percent, or 18.5 million unemployed Americans. Here's how we came up with the number:

More: Could The Jobs Numbers Be 'Cooked'?

First, Include 'Discouraged Workers'

That amounts to 803,000 discouraged workers. These individuals would join the official 11,742,000 unemployed Americans, but also expand the labor force by the same amount. Adding discouraged workers brings the national unemployment rate to 8.1 percent.


Then Add in Involuntary Part-time Workers

Many people are working part-time "for economic reasons"--- because they can't find a full-time job. The laid-off engineer, who's now bagging groceries 8 hours a week, for example. This is a little murkier, since the Bureau of Labor Statistics counts anyone as part-time who works less than 35 hours a week, and it seems a little dubious to call someone unemployed who clocks 34 hours.

More: Employer Explains Why He Won't Hire The Unemployed

Fortunately, another body tallies part-time unemployment in the U.S.: the Organization For Economic Cooperation and Development. The OECD defines part-time as less than 30 hours a week, which is a way to cut out some of the folks we probably wouldn't describe as "unemployed." In 2011 (the last year for which data is available) the OECD counted around half as many part-time workers as the BLS did that same year, so it seems reasonable for the purposes of our "real" unemployment number to at least halve those 8 million involuntary part-time workers.

Adding involuntary part-timers, working roughly less than 30 hours a week, brings the unemployment rate to 10.6 percent.


Don't Forget The Disabled

Federal disability insurance has exploded in recent decades. There are many reasons why 8.9 million working age Americans now receive disability benefits, like baby boomers aging, the rise in the retirement age, and more working women who now qualify. But lots more working age Americans are also disabled because of the decline in low skill jobs. Someone with terrible muscle pain is truly disabled, if their only option for work is manual labor.

More: From Long-Term Unemployment To Full-Time Job: How I Did It

According to Kathy Ruffing of the Center on Budget and Policy Priorities, demographic factors explain two thirds of the growth in disability rolls since 1990. So that leaves approximately two million disability recipients unexplained. Assuming these individuals are all people who would work if there was work available that didn't put undue strain on their medical issues (often back pain), then the "real" national unemployment rate would be 11.7 percent.


It's Probably Worse Than We Calculated

There are lots of other possible additions to the "real" unemployment rate here, including people who retired early because they couldn't find work and mothers who took time out from the workforce to raise small kids, but are now staying home much longer than expected. But there's no specific data on these individuals, so it's almost impossible to estimate.

It is clear, however, that if our unemployment rate reflected who we usually consider unemployed -- people who aren't working, or who are working very little, and would happily take a full-time job if there was one available and they were capable of doing it -- then it would be almost double than it was it is in the books. Almost one in eight Americans who wants to work is not.

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ReddWine

yeah...and Im a professional artist.

Do you know that people dont buy art anymore. they are buying food and gas....I havent sold a piece in over a year. I used to sell one a month before Obama. Its bad out there.

February 18 2014 at 1:51 PM Report abuse +1 rate up rate down Reply
Jake E

Yeah, I'm a veterinarian, and let me tell you one thing. When the economy is in the toilet, so is the veterinary profession. Less people bringing pets in for visits means less jobs, means A LOT less than 87,000 a year. Plus your debt load from vet school could be about $200,000. Enjoy joining all of us other suckers if you go that route.

October 16 2013 at 12:47 AM Report abuse rate up rate down Reply
Dave at RMP

The only Department of Labor figures showing actual nationwide counts are kept through the Employment & Training Administration (ETA). BLS counts are survey-based with seasonally adjusted figures manipulated freely, depending upon what the division's statisticians anticipated or expected to see. Surveys are taken of businesses and households alike on a four-month rotating basis. While it's easy for increasing numbers of Americans to recognize one too many letters in the BLS acronym, what insiders have said since election season last year is even more telling.

When U3 and U6 rates were slashed last fall with nowhere near the number of jobs added to the economy as purged from the BLS’ ranks of unemployed and discouraged, marginally unemployed job seekers, former Commissioner of the BLS, John Hall, whose four-year stint ended in January 2012, called the figures his former agency released “deeply flawed.” A former Chief of Staff with the Department of Labor went further, when Rick Manning ridiculed last fall’s findings, saying “It appears that Obama has hired infamous Iraqi Information Minister Baghdad Bob to calculate the unemployment rate. Anyone who takes this unemployment report seriously is either naïve or a paid Obama campaign adviser.”

The real ETA counts are where this Administration's ugly employment data shows up in ways that have been gut-wrenchingly painful. When Thursday's ETA advance weekly claims report appears this week, it will have become official that Obama's moribund economy shed more than 100 million jobs. That 100 millionth filer for unemployment since Obama took the Office of President showed up on Tuesday, May 14th. Before week's end, another quarter-of-a-million Americans filed claims after losing jobs to bring the total to about 100,250,000. That figure will be finalized Thursday and within a few thousand of that early estimate.

Along with recognizing the sickening pace of job loss and life-changing cessation of income, some basic comparison against Obama's predecessor should provide perspective for just how ugly this Administration's economy has been. When compared directly against George Bush's second term on a week-by-week and month-by-month basis using real nationwide ETA counts, Obama's failed economy shed 107,600 more jobs on average each week and 495,000 more during months with 31 days in them than suffered comparable loss under his predecessor at the outset of 2013, 205 weeks into the Obama Presidency.

The ETA's actual count of workers, according to nationwide employers' payroll records, was 133,886,830 in January 2009. Today, it stands at 129,204,324 for a loss of 4.67 million jobs late in Obama's 18th calendar quarter. At election time, the real job loss total was more than 5.8 million. Since 2009, the infusion of more than 30 million ready, come-of-age new entrants to the workforce from amongst our own graduates, legal immigrants, not-so-legal migrants, H1B's and asylees makes the net loss all the more ugly.

May 22 2013 at 6:45 AM Report abuse +2 rate up rate down Reply
N

Apparently AOL is the only one that does not know about this, yet assumes we are ignorant... screw off press....

May 17 2013 at 3:24 PM Report abuse rate up rate down Reply
PNW

Due to Sequestraton I just recieved a notice of termination of Unemployment benefits and I am still unemployed. So, I guess I will not longer be counted as part of the unemployed. Thinking this must be happening to many others and they just start notifying us of this, IS this WHY the numbers are dropping? This is a joke and a manipulation of statistics.

May 13 2013 at 2:03 PM Report abuse rate up rate down Reply
Reb

You are a little low - it's more like 13,5% and 24 million out of work or underemployed,

May 05 2013 at 1:29 AM Report abuse rate up rate down Reply
legalcld

Say what? The numbers are worse than the government is telling us? Seriously? Welcome to O's America$$ Isn't it grand? Don't worry help is on its way with amnesty given to 12-20 million ILLEGALS that will flood the market to compete for all those jobs that aren't there!

April 09 2013 at 10:39 AM Report abuse +1 rate up rate down Reply
Michael J Grella

There are no great paying jobs anymore in the USA because all of the factories left. Thats what needs to be addressed . Also the companies that are here dont want to pay a fair wage anymore. So how does anyone "Live" they dont we all survive to die. Thats the current American dream ...Sad for everyone and this once great nation.

April 09 2013 at 9:54 AM Report abuse rate up rate down Reply
1 reply to Michael J Grella's comment
eyesandearsopen

Actually there are lots of openings for skilled labor, including for those needing training. One problem though is that everyone tells kids you can only be successful through college. Therefore they won't take jobs in manufacturing where you have to get your hands dirty. It is beneath them. These companies would love to bring manufacuring back, but the lack of skilled labor and the increasing regulation and the compliance cost to employers makes it all but impossible.

May 10 2013 at 3:47 AM Report abuse rate up rate down Reply
c.mertz

I can only imagine how high unemployment would be if obama hadn't created all those green energy jobs.

April 09 2013 at 9:47 AM Report abuse -1 rate up rate down Reply
marine1942

But, but, Obama said recession was over and he is still king

April 09 2013 at 9:29 AM Report abuse +7 rate up rate down Reply
1 reply to marine1942's comment
phil

...Oh. So you're suggesting that the FIRST HUGE Obama stimulus, that was "earmarked" for jobs for Americans....you're suggesting that this was nothing more than a trillion dollar slush fund???? Say it
Ain''t so!!!! Sheeple. You deserve this economy.

April 09 2013 at 9:44 AM Report abuse rate up rate down Reply

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