Thursday, October 30, 2008

Data on employment/unemployment

Finding better data

The unemployment rate is at 6.1 percent. Does this number accurately reflect reality?

Probably not. The unemployment rate leaves out underemployed (part-time workers who want or need full-time work), people who aren't collecting unemployment insurance but who are unemployed, and people who have dropped out of the labor market altogether. A better piece of data might be what the Bureau of Labor Statistics calls the 'U6.'

Daniel Gross at explains this statistic:

To compile the U6, the BLS takes the number of unemployed, plus all marginally attached workers, plus all of those employed part-time for economic reasons, and then calculates that total as a percentage of the sum of the entire civilian labor force plus marginally attached workers.

As you can see from the data-table above, the U6 rate right now is 11.0 percent and rising. This means that the economy is underperforming for about 1 in every 9 of us. So chances are, we each know at least somebody who is struggling. And things are getting worse, not better.

My sense is people have a pretty good feel for their economic environment right now, and they don't like what they feel.

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