> the unemployment rate numbers are fudged by UNDERemployment
The employment numbers are not fudged, they are very specific as to what they contain. Further there are 6 of them so its important to specify which is applicable to whatever you're trying to determine. In the case of underemployment U-6 is the measurement you want to look at.
If you look at the historical charts for U-6 you'll see we're below the unemployment level of 1995.
>We've gone from ~4% unemployment to 10-15%. Which sounds bad. But if you flip it around, we've gone from 96% employment to 85-90%. The vast majority of people are still employed and the economy is mostly still humming along.
This is not how it works.
The US measures unemployment using levels, the 10-15% are U-3, which only counts people without jobs who are in the labor force. To remain in the labor force, they must have looked for a job in the last four weeks.
The U-6, or real unemployment rate, includes the underemployed, the marginally attached, and discouraged workers and is at 25%.
There are plenty of deeper explanations online but basically politicians love to talk about U-3 but the true unemployment is U-6.
> For every person counted there's at least one wishing for work but given up enough to not report.
Isn't that essentially what U6 tries to measure? It indeed tends to be fairly close to double the headline U3 unemployment rate most of the time. It is highly correlated to U3, though, so as long as you are looking at U3 in terms of changes instead of in terms of the absolute number, U6 doesn't add much to the picture.
> BTW: the "unemployment" figures fail to take into account people who are no longer looking for work and even worse, the masses of underemployed, people who can barely make ends meet.
This is strictly true -- the one measure called "unemployment" does not capture these.
However, the official unemployment figure is one of six "alternative measures of labor underutilization" published by BLS [0], which while they have different numbers tend to follow the same overall trend, and those measures do track things like discouraged workers, underemployment (at least, in some forms), etc.
>"The reported U-3 unemployment rate is measuring the rate of full-time job loss in the economy. That makes a good barometer of the economy as it can describe if job losses are accelerating or not."
I think this is a perceptive statement; U-3 is most like the derivative of unemployment, so it's sensitive to changes, but not to steady-state issues.
We should probably look at U-6 to help understand where we stand long-term, and U-3 to get a glimpse of whether things are getting better or worse. Unfortunately, I don't think many people want to think about these issues separately, so they'll only want one number.
> The BLS puts out 6 different unemployment statistics for every period. U3 is the "official rate", but you can also look at the other ones, including U4 = U3 + "discouraged workers", U5 = U4 + "marginally attached" workers, U6 = U5 + part time workers who would like to be full time.
> Personally, I don't agree with this redefinition because I think it is at least _theoretically_ possible to get to a state where those who lose their jobs due to layoffs etc. are employed again extremely rapidly and the rate ends up being much closer to zero.
This has never happened though.
U3 being the Official Rate appears to because it's the metric comprised of orthogonal data points. The U4-6 rates are linearly related to the U3 rate; when the U3 doubles, so does the U5 and U6, likewise when the U3 halves. Which makes reporting the U4+ pointless for trending, it doesn't matter if you pick the rate that goes from 4% to 8% or the one from 7% to 14%.
The U1 & 2 rates do not demonstrate this correlation. The U1 can remain flat while the U2 spikes because they represent different pools of people.
So while we intuitively think that including discouraged workers make since, from an analytical perspective, including them doesn't give us any more predictive power than we had before. Calling sub-5% U3 unemployment "full employment" is more of an empirical definition than a logical one; it just happens to be the lowest point we've ever measured.
What does this even mean? It's a very specific metric, not sure it is backing up your argument in the way you think. There are a lot of discouraged or under employed workers who would disagree that things are not changing in a fundamental way.
> People who stop searching for jobs are excluded from the official unemployment rate
The official employment stats cover both. U3 is the unemployment rate, which correctly covers only the labor force, while U6 covers the labor participation rate, which covers the population.
> Second, I think the total number unemployed may be miscounted. I know the unemployment rate number has huge problems.
Maybe you’re referring to the fact that it only counts people who are actively looking for a job, and ignores those who would like to have a job but have given up looking?
> First is it does not account for people who have dropped out of participating in the labour market
There are alternative measures to U3 (the official unemployment rate). The U5 and U6 measures of unemployment are designed to capture discouraged workers.
Both of them are right, this is a common confusion in unemployment statistics. Unemployment as a technical term refers to people who both don't have a job and are "in the workforce", meaning they gave the right answers for the survey taker to conclude they're looking for a job. People who aren't trying to find a job are "out of the workforce" but not "unemployed".
> That's entirely incorrect. We track all of these layers in fact.
No....it is entirely correct. The unemployment rate that was quoted was exactly as I described. I didn't say the other statistics weren't tracked, I said the statistic quoted above, and the thing commonly referred to as "the unemployment rate" does not count it.
For what little it's worth, I never trust this statistic because the unemployment rate calculation doesn't count certain types of people: such as those who've given up looking for work. Given the weird times and general malaise of society, this might be a non-trivial variable right now. I could be wrong about this, but it remains a possibility that we're not getting the right picture of what's happening.
The employment numbers are not fudged, they are very specific as to what they contain. Further there are 6 of them so its important to specify which is applicable to whatever you're trying to determine. In the case of underemployment U-6 is the measurement you want to look at.
If you look at the historical charts for U-6 you'll see we're below the unemployment level of 1995.
http://www.macrotrends.net/1377/u6-unemployment-rate
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