The Real Job Picture

Published on March 10, 2005 By COL Gene In Politics

I sent my Blog,"Unemployment Rate does not give a clear job picture" to the Dept of Labor. Over the past week, I have exchanged three sets of E-mails with staffers at the Division of Labor Force Statistics about the unemployment rate. They agreed with the points in my Blog and told me, "the official Unemployment rate doesn't provide a full picture of labor market difficulties". The offiicial unemployment rate that is sighted, which went from 5.2% to 5.4% in February does not count many people who are not employed or workers that are "underemployed" which means they do not have living wage jobs. The staffers said, a true picture of the percent of the population that need employment is labor underulization. Table A-12 line U-6 shows the full extent of needed jobs in America. The staffers stated, the data on" U-6 is the broadest measure that rate is about twice the official unemployment rate". The web site the provided for this information is www.bls.gov/news.release/pdf/empsit.pdf

I went to that reference and found that as of February 2005, the underemployment rate on U-6 of table A-12 is 9.3%. Thus over 9% of workers do not have a living wage job which is a far cry from the 5.4% unemplyment rate used by the government. This is the result of strong worker population growth and a lack of new jobs that pay a living wage. The comperable underemployment rate in December 2000 was 6.9%.

Comments

ParaTed2k

on Mar 10, 2005

Great homework COL Gene, but there is one glaring problem with your conclusion...

The staffers stated, the data on" U-6 is the broadest measure that rate is about twice the official unemployment rate".

Measuring any statistic against the broadest posible variable doesn't give any more clear a picture than using the most conservative. Furthermore, even the broadest numbers are still derived from the same sketchy data gathering methods as the most conservative.

While a 9.3% unemployment rate goes far to back you point, it still doesn't count seasonal workers, many self employed people, full time Ebay traders.... etc.

In other words, if we can't trust the data that generated the 5.2% rate, how can we trust the same data's (and organization compiling the data (BLS)) broadest 9.3% rate?

COL Gene

on Mar 10, 2005

Both may be correct but the point is that the exemptions in the unemployment rate calculation does not give a true picture as to the extent of the working population that do not have jobs that pay a living wage. Every person that does not have such a job detracts from their ability to increase consumption (demand). They also increase the drain on things such as Medicade and other forms of welfare because they do not have employment that enable them to pay their living expenses. One of the points I have been making is that although the economy has improved, it has improved more in increased profits and increased productivity but not in the creation of enough living wage jobs for the growing population!

ParaTed2k

on Mar 10, 2005

and on that we did agree (and still do).

The other side of that coin though is, while there are people in all the situations you mention, there are also those who make decent to downright good money that are considered "unemployed" or "underemployed". Simply saying that the unemployed and underemployed are drains on the system is as misguided as saying all is well with the world because our official unemployment rate is in the mid 5% range.

As I said in another thread (the celebrated one where we actually found something on which we could agree), we should be basing our employment picture on tax documents, since they not only document the year of work, but also the year of salary and wages.

COL Gene

on Mar 11, 2005

ParaTed2K

I agree that data using tax info would help to give us a clearer picture of the earning condition of Americans. That information is in the hands of the IRS and could be extracted without disclosing the income of any person. There is data about average weekley wages but I do not recall seeing what % of the work force has income below the levels needed to live. We do know, the trend, especially for jobs created by small business, is to provide less health and retiirement benefis. In fact, that is the trend for larger companies. That also creates problems for lower income workers to provide health care or have retirement beyond Social Security.

ParaTed2k

on Mar 11, 2005

We do know, the trend, especially for jobs created by small business, is to provide less health and retiirement benefis. In fact, that is the trend for larger companies. That also creates problems for lower income workers to provide health care or have retirement beyond Social Security.

Well, this may be changing the subject of your article, but since it just seems to be you and me anyway, I guess we can take it anywhere we want it to go.

I am a firm believer that we are in the beginnings of a complete change of the status quo for many things in our society. One of them being, the great experiment of being taken care of from the cradle to the grave is ending. Our folks take care of us while were kids (hopefully that won't change, but there are even signs of that changing.. sadly); Our employers take care of us until we retire; and then our Social Security takes care of us until we die.

I think nothing has trapped workers in jobs they hated more than this paradigm. I dare say that you and I both know tons of people who, because of the stress of a job they hate, they lose weeks of their life, every day they go to work. Ask them why they don't start looking for another job... "insurance" "retirement package" "seniority"....etc. All the things that are supposed to give a worker incentive to work, entrap him or her the most.

Look at how many Senior NCOs and Officers you knew who were just filling a seat until they got their letter. Their retirement freed them from the hell they were in, and freed the rest of us from their burnt out style of "leadership".

I also think that the insane costs of healthcare is a direct result of 3rd party payments. How can we expect market forces to work, with such a top heavy artificial economy?

I think we are seeing the end of a lot of things here in the next couple of decades. I think, like all major societal changes, it will hurt a lot of people, but if we pursue the changes and adapt to them, instead of fear them and deny they're happening, our society will be much better for it.

That's my thoughts on your reply. I'm also glad for the discussion between us.

COL Gene

on Mar 11, 2005

Today I said to my wife that we may be seeing the beginning of changes in America that if we do not find solutions may be the start of the end of our greatness. I believe most issues can either be resolved of made more acceptable. However, we are not taking steps to do that. The one issue I have tried to sterss with my children is the need for them to put some money into a retirement fund outside of Social Security. I too am glad for our discussions.

terpfan1980

on Mar 11, 2005

I hope you enjoy this response, cause another one is coming that will clearly take you to task in other areas.

Your thoughts and concerns in this area are admirable, but you have yet again ignored the history in the area in which you are complaining.

The jobs situation hasn't changed that much in either direction from historical numbers. Jobs were a problem under Johnson, Nixon, Ford, Carter, Reagan, Bush and even Clinton (and even before that list). There were problems with underemployment in the 20s, 30s, and 40s, as well as every other decade since then.

The statistics (remember, there are lies, damn lies, and then there are statistics) never give an accurate picture. There are too many things affected by any one data point to get an accurate picture. You can make some educated assumptions, but those are just that, assumptions.

Do we need to put more people to work in this country? Yes. Do we need them to earn better wages so they can spend more of those wages on consumables? Yes. Do we want them to earn more so that we can collect more in revenue to pay for government services that are needed? Yes.

But either way, one can't simply look at the jobs situation and blame it on the policies of the party in power. The President and Congress can do only so much to encourage job growth. Even with interest rates at record lows, the economy was slow to get moving again because of prior tightening by the Fed. Businesses move at their own pace, and do so in response to their own customers or their own potential for sales and revenue growth.

Unless the government steps in and micro manages all areas of business jobs will be created or be compensated for at a rate that is commensurate with the needs of the market place. If the government does interfere, it gets on a treadmill that it can never jump off of (think George Jetson when yelling at his wife to stop this crazy thing).

Market forces will always come to bear to right size the market, and that is as it should be. Complaining about the problem is wasting energy that could be put into entrepreneurship. You could be working on building a better mousetrap, or coming up with the next big thing that could create jobs for many individuals. Be it a consulting business, or whatever. Simply pointing at a problem and declaring it a problem is doing nothing. Even writing hundreds or thousands of words about it also does no good, unless you are writing words that tell others how to find better jobs, how to get those jobs, and how to make more money in working at those jobs.

All else is wasted effort and not much more than points whoring.

Daiwa

on Mar 11, 2005

terpfan1980 -

I think you are right on and your point could be summarized in this way: "The government exists thanks to the market, not the other way around."

Shifting the focus of the discussion from a number that sounds relatively good to a number that sounds relatively bad, simply by choosing to do so, is pointless. Both numbers have existed in relation to each other all along. It's like saying instead of comparing apples & apples, we should compare apples & oranges, because oranges look bad when compared to apples. Compare the same, equally flawed, numbers from different points in time - then, at least, you can have an intelligent, though hamstrung, discussion about trends. That's it.

Cheers,
Daiwa

Lee1776

on Mar 28, 2005

I do have some issues with your oppion and numbers. Your saying that 9.3% underemployed rating is bad. Did you look at the historical numbers for that chart for more then just one year (i.e. 2000 the best in 12 years)? Because it also shows that for two of the six years that appear in that data base you used (to pick this obscure number from), shows that during the middle of the Clinton Administration it was at 10%, even higher then the highest Bush rating. I will conceded that the average 8.8% during the last six years of the Clinton years (first two not available) and a 12 year average of 9.0% is lower, but that is not taking into account the first two years of Clinton or the historical averages before 1994. From Bush's highest point at 9.9% (lower then Clinton) it has dropped .6% and shows no changing its decline (can you show me different?). Let us not even acount for the effect of 9/11 and the tech bubble busting either.

http://www.bls.gov/webapps/legacy/cpsatab12.htm

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