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Tuesday, November 8, 2016

How is unemployment since 2008?

First, it is incorrect to say "x% of people are unemployed" because some people are retired, quite a few actually. So we say "x% of civilian workers are unemployed", which is the definition of the U3 unemployment number. This looks at how many people who are able to work, are actually unemployed.

There are several ways to track unemployment in the US. The most common number used by the US major media is the U3 rate. Here are how all the rates are defined.
  1. U-1, persons unemployed 15 weeks or longer, as a percent of the civilian labor force;
  2. U-2, job losers and persons who completed temporary jobs, as a percent of the civilian labor force;
  3. U-3, total unemployed, as a percent of the civilian labor force (this is the definition used for the official unemployment rate); (note: this does not count gov't workers)
  4. U-4, total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers;
  5. U-5, total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers; and
  6. U-6, total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.
But we need to define some more terms.
  1. The unemployed: The official concept of unemployment (as measured in the CPS by U-3 in the U-1 to U-6 range of alternatives) includes all jobless persons who are available to take a job and have actively sought work in the past four weeks.
  2. Discouraged workers (U-4, U-5, and U-6 measures) are persons who are not in the labor force, want and are available for work, and had looked for a job sometime in the prior 12 months. They are not counted as unemployed because they had not searched for work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them. 
  3. The marginally attached (U-5 and U-6 measures) are a group that includes discouraged workers. The criteria for the marginally attached are the same as for discouraged workers, with the exception that any reason could have been cited for the lack of job search in the prior 4 weeks. 
  4. Persons employed part time for economic reasons (U-6 measure) are those working less than 35 hours per week who want to work full time, are available to do so, and gave an economic reason (their hours had been cut back or they were unable to find a full-time job) for working part time. These individuals are sometimes referred to as involuntary part-time workers.
As of Q3 of 2016, the U3 is 3.5% of workers are unemployed. But the U6, which includes the under-employed, is 9.8%, so there's about 32.5 million workers unemployed. Rush Limbaugh said on the radio today that 90 million people are unemployed. If he means 90 million workers, that is false.

The labor participation rate (number of all people who are actually working) is 63%. So that means 37% are unemployed. 325,000,000 * .37 = 120.25 million people are not working. This is not the same as unemployed civilian workers. This number includes the retired also. People who are not working is not the same as civilian workers who are unemployed.

Be careful you understand what words the media is using, and what those words mean. Vague words made by talking heads are often disingenuous and meant to mislead.

U3 graph here 2006-2016.
2d graph by year and month where a colored square indicates unemployment rate.
The current US population is 325,000,000.

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