The REAL Unemployment Numbers

Leo Hindery, Managing Partner of InterMedia Partners, produces a Summary of U.S. Real Unemployment each month after the Bureau of Labor Statistics (BLS) releases its monthly Household and Employer Surveys. This month the BLS touted the creation of 162,000 jobs. Not so fast, says Mr. Hindery (pictured at left).

Hindery’s summary makes three important adjustments: it identifies average weeks unemployed, job openings and the ‘shortfall’ in jobs needed to be at full employment.  With the adjustments made:

  • The number of real unemployed workers in all four categories of unemployment – BLS, part-time-of-necessity, marginally attached, and discouraged – increased by 30,000 to 29.78 million, versus 29.75 million in February.  This increase in real unemployed workers of 30,000 jobs contrasts sharply with the 162,000 (non-farm) job gain announced by the BLS.
  • The real unemployment rate is now 18.7 percent, compared to February’s real unemployment rate of 18.6 percent and to the much lower official BLS rate of 9.7 percent.
  • The number of real unemployed workers has increased by 13.0 million since the start of the Recession, whereas the nation should have been creating a net 3.8 million new jobs over the past 27 months in order to keep up with natural growth in the labor force of around 140,000 workers per month.
  • The economy needs to create 21.8 million new jobs in order to be fully employed in real terms (i.e., a real unemployment rate of 5 percent).

Hindery notes that the average number of weeks unemployed is at least 31.2and thenumber of workers unemployed for a half year or longer is at least 10.0 million (i.e., BLS’s official figure of 6.5 million plus the 3.5 million discouraged workers). These two numbers considered together are a much better measure of the real employment condition than is either the more commonly used ‘initial jobless claims’ or ‘rolling four-week average of initial jobless claims.’