Friday, February 04, 2011
Unemployment's Grim(mer) Reality
No, it's not as pretty as BLS wants you to believe.
The Household Survey numbers themselves had huge adjustments this month: the BLS revises its population numbers every year based on the latest Census Bureau estimates. This year, that pulled 500,000 people out of the labor force. I think the revision is a good thing - without it, the BLS would have reported that 590K people moved from unemployed to employed.....in a month where the Establishment Survey tells us that only 36K jobs were added. [The unemployment rate is based on the Household Survey, but the Establishment Survey (industry survey) is considered to be a more accurate gauge of how many jobs are added or lost.]
....the number of people who have dropped out of the labor force has gotten so large. For example, the Household Survey says that 622K people dropped out of unemployment. Of these, 100K found jobs, 200K are "marginally attached" (i.e., they'll show up in the U-4, U-5, and U-6 unemployment rates), and 300K have dropped out of the work force entirely (they won't show up in any of the unemployment calculations). When 5/6 of your "improvement" is actually bad news, it's obvious that the U-3, and even the U-6 unemployment rates are not very useful (except in harassing the administration, of course).
Gallup reports U-6 (their version) at 18.9%.
More at Calculated Risk.