"Oh, if it were only 6.7%"

"Oh, if it were only 6.7%"

On Friday, the government announced that the unemployment rate rose from 6.5% to 6.7%. Also, employers cut 533,000 jobs. Have you noticed something strange?

Well, it’s not strange. It’s just that the unemployment rate, correctly calculated though it is, is not a very good measure of the job situation. What should be added are those too discouraged to look for jobs any longer. [And add to these, those who recently became ex-workers, who because of short term trauma, cannot yet start looking for jobs, knowing how hard it is to find one, and also knowing that what they are skilled in is no longer needed. This implies working at a low-paid unskilled job, if you can find it, at perhaps half the pay you were recently earning. ]

Add in also, on a calculated basis, those working part time who want to work full time, but can’t find full time jobs. By calculated, I mean that if there are 4 persons working 10 hours a week who want to work a 40 hour week, 3 persons should be thought of as unemployed. Without doing the 4 equals 3 calculation, the total number of part time workers who wanted to work full time rose by an additional 621,00. Another angle: the total number of people out of the labor force (not working, not looking) dropped by 637,000.

Actually, there is a 3rd addition that could be made, but isn’t–those working "full time," but for whom the length of the work week (and their salaries) have been reduced, as the employer says don’t come in this Friday. All recessionary periods are periods in which the "average" work week is decreasing. Who works overtime any more, pulling up the average, except bill collectors?

Anyway, the first two of these additions–the so-called discouraged workers (it should be called the DNW, discouraged non-workers) and the part time workers who want to work full time–are, indeed, calculated. For November, this calculation hit a record 12.5 percent (the government began calculating this in 1994) and it states in Saturday’s Times where I am taking this from–almost all economists know this calculation is made, though most, I think, do not follow this statistic religiously–that it rose 1.5% since September.

Thus, the Times on B1 (Saturday) has a story entitled "Grim Report On Jobs Not Showing Full Picture." The story goes on to say it is much worse than what it looks like.

Will Santa bring us more such presents? Or will his successor deliver the increasingly bad news in January? [More on the economy, hopefully, to follow shortly. Nothing like being retired! Unless your pension goes bust!!]