WHY the actual unemployment rate could be as high as 37%

[kah13176]

I'm not sure if anyone else has thought of this, but it's interesting nevertheless.

According to the BLS, the unemployment rate is roughly 10%, but it is likely it is much higher. Factoring in people who have given up the search and those who are underemployed, I've heard estimates usually around 20%

NOW, here's the kicker. The unemployment rate is used to gage the strength of the economy, correct? And we can all agree that government bureaucracy inhibits, or at least contributes nothing to, economic growth. 1 in 6 people in the workforce are employed by the government. This means that 1/6 x 100 = 16.7% of those considered employed are part of the government bureaucracy. So by saying that the unemployment rate is 10% is a gross underestimation of economic strength, or is at least very misleading.

A better estimate:

10% unemployed + 10% given up or underemployed + 16.7% employed by the government = 36.7%

Think about that: 36.7% of the entire workforce is either unemployed, not able to contribute their full potential, or even hindering economic activity!

[cubical]

I have a civil engineering degree and have had two years trading equities in NY and I have been looking for 2 months and have not sniffed anything. I feel like companies just post job openings for the fun of it and never actually hire people.

[american.swan]

I'm not buying the 36.7%, but I'm agreeing with your thinking. So 20% of the total workforce is unemployed, but 1/6 of the workforce works for the government, so what is the number of unemployed not including government workers?

[Expatriate]

Say, where did you find the statistic that 1 in 6 are employed by government? I've been looking for a good source on something like that.

Not exactly the same thing, but I fear that as long as the market is controlled by government in the slightest, everyone who participates in the economy is "employed" by them.

[anaconda]

I'm not sure if anyone else has thought of this, but it's interesting nevertheless.

According to the BLS, the unemployment rate is roughly 10%, but it is likely it is much higher. Factoring in people who have given up the search and those who are underemployed, I've heard estimates usually around 20%

NOW, here's the kicker. The unemployment rate is used to gage the strength of the economy, correct? And we can all agree that government bureaucracy inhibits, or at least contributes nothing to, economic growth. 1 in 6 people in the workforce are employed by the government. This means that 1/6 x 100 = 16.7% of those considered employed are part of the government bureaucracy. So by saying that the unemployment rate is 10% is a gross underestimation of economic strength, or is at least very misleading.

A better estimate:

10% unemployed + 10% given up or underemployed + 16.7% employed by the government = 36.7%

Think about that: 36.7% of the entire workforce is either unemployed, not able to contribute their full potential, or even hindering economic activity!

I wouldn't say that workers in the government sector contribute nothing. They probably do it far less less efficiently than if it were done by the private sector. Many of the services provided by government workers would be performed in the private sector otherwise, but in different quantities, at different "prices," and with varying levels of productivity. I have no idea to what extent, however. It would make a great study. Probably somebody has done it already, if not many. The government workers are not "unemployed" because they receive an income paid from us for services. It's just that it's forced and therefore severely distorts the market and causes social deadweight loss. I think this is the lost GDP that you actually wish to evaluate and quantify. Economists speak of "unemployment" in broader terms sometimes. Capital can go "unemployed" much like human labor and entrepreneurship, for example. And, to the extent that the government laborers are not used as productively as they might otherwise, there is a serious component of "underemployment" in each of government employee. So, rather than counting the entire government sector as "unemployed," I would prefer to estimate some percentage of underemployment. If I had to flail a guess I would say they are about 30% productive and therefore 70% underemployed resources, which a free market would quickly adjust by matching a competitive wage to their marginal productivity and hiring them to produce things that are demanded with some actual information from market prices.

[HOLLYWOOD]

US Treasury's Receipts collected from Federal Income Tax reflects 20% Unemployment.

Unfortunately the BS statistical nonsense of BLS/FEDS has a professional shining shoes 8 hours a week as employed.

I'm not buying the 36.7%, but I'm agreeing with your thinking. So 20% of the total workforce is unemployed, but 1/6 of the workforce works for the government, so what is the number of unemployed not including government workers?

[Zippyjuan]

You can't extrapolate an unemployment rate by looking at tax revenues. Say I worked for a company for 20 years and had worked my way up to a high paying position with the company. Then, for whatever reason, I leave and take a new job. I no longer have 20 years experience with my new company so my wages will be lower to start and my tax payments will be lower. Did my changing jobs change the unemployment rate? I went from one job to another and was not unemployed but the taxes I paid went down because my income went down. I also disagree with not counting people working for the government or military as not employed or not in the work force. These are employed people with jobs. Should people who have given up looking for a job be considered unemployed? I disagree with that as well. If you are not interested in getting a job (for whatever reason), you should not be counted as unemployed- you are willingly without a job. That is why official figures include the military and government workers and do not include people not actively looking for a job.

The figures are determined via random surveys so they may not be 100% accurate (they do not interview every person in the country) but give a pretty good idea of what is happening.

[enoch150]

Civilian noninstitutional population are all persons 16 years and up, not in jail, mental hospitals, or the military.

Civilian labor force are all persons classified as either employed or unemployed.

Civilian noninstitutional population: 238.7 million

Civilian labor force: 153.2 million

Participation rate: 64.2% (153.2 / 238.7)

Not in labor force: 85.5 million (238.7 - 153.2)

That means the non-participation rate, for whatever reason, is 35.8%.

And the Civilian labor force breaks down like this:

Employed: 139.3 million

Unemployed: 13.9 million

Employment-Population ratio: 58.4% (139.3 million / 238.7 million)

You could make the argument that the true unemployment rate, disregarding all causes, is 41.6%.

http://www.bls.gov/news.release/empsit.a.htm

[sevin]

A better estimate:

10% unemployed + 10% given up or underemployed + 16.7% employed by the government = 36.7%

Think about that: 36.7% of the entire workforce is either unemployed, not able to contribute their full potential, or even hindering economic activity!

I've thought about this before. Most of the people working for the government may as well be on welfare. They sit at desks and push papers all day and don't do anything useful.

I have a friend who got a job (something to do with GIS) because of Obama's stimulus program. He hates it because he says he just sits there all day. I said, "You mean you get your work done midway through the morning?" He said, "No, I literally sit there and surf the net all day. I finished my work months ago. I've asked for new assignments, but there's nothing to do." He may as well sit at home and collect a welfare check!

So yes, in a way it's much worse than it seems, maybe 30%.

[mtj458]

This is a pretty ridiculous way of looking at it. I think most of us here would agree that some government jobs have legitimate purposes. Even if not, it's not as if all of these jobs contribute zero value, they just don't create enough value to cover the cost. If you want to say that 1/6 aren't employed at full potential, then fine, but it's very misleading to say that they might as well be unemployed.

[Zippyjuan]

Thanks for sharing the numbers. One take on them:

And the Civilian labor force breaks down like this:

Employed: 139.3 million

Unemployed: 13.9 million

Total emplyed plus unemployed: 153.2 million.
Percent of that unemployed: 9.07%

I would include (as (I mentioned earlier) military in the employed figure since we have a voluntary enlistment for the military and these people do have jobs. But it is interesting to see how you can play around with numbers to get different results. It is just important to state what it is you are trying to measure. If you want the total percent of the population out of work you would have to include babies, seniors, those in hospitals or institutions or disabled or in school- those either unwilling or unable to work for whatever reason. Then you are looking at a percent out of some 300 million people. Then if we figure 85.5 million not in the work force plus 13.9 million unemployed out of the workforce, you get 99 milllion unemployed or about a 33% unemployment rate. This is fine too. It is really more important the trend in numbers- not necessarily the exact one. If unemployment is falling, that is good. If it is rising, that is not. Higher than "average"- good, lower than "average"- not so good.

[kah13176]

Just something to think about.

Source, by the way: http://www.aipnews.com/talk/forums/t...=19084&posts=1