The unemployment number is way off

A former Bureau of Labor Statistics head says actual joblessness is closer to 11%. Voices from the left and right, and even the Fed, seem to agree.

By Jason Notte Jul 19, 2013 2:36PM
Man reading job listings (© Tetra Images, Tetra images, Getty Images)The Bureau of Labor Statistics' unemployment data is wrong because it's simply not counting people currently out of the workforce who firmly believe there just isn't a job out there for them.


That's not some government critic's rant or some right-wing conspiracy: It's the view that Keith Hall, who led the Bureau of Labor Statistics from 2008 until last year, shared with the New York Post on Tuesday. He backs it up by pointing to the BLS employment-to-population ratio, which says only about 58.7% of the available workforce is employed. That's below the pre-recession peak of 63% and roughly the same as it has been since August 2009.


That leads Hall to believe that the actual unemployment rate is about 3% higher than the stated 7.6%, or closer to 11%.

Critics like to point out that Hall now draws a paycheck from the right-leaning, Koch Brothers-funded Mercatus Center at George Mason University. That may be, but his criticisms are less in line with Jack Welch's accusations of outright fraud than they are with Federal Reserve Chairman Ben Bernanke's admission to the Senate that the unemployment percentage may be "in some ways . . . too optimistic a measure of the state of the labor market."


That's no small matter, because the Fed has changed its threshold for raising interest rates from 6.5% unemployment to 7% and is making noise about slowing its $85 billion-a-month bond-buying stimulus. Using Hall's metric, the Fed would be jacking up rates from zero with the nation at roughly 10% unemployment. Given Bernanke's recent testimony, it sounds like even the Fed chairman isn't believing the numbers he's seeing. 


Both sides of the aisle think there's good reason for his skepticism. Mark Gongloff at The Huffington Post notes that the labor-force participation rate, which includes people working and looking for work, has been about 63% in recent years, well below the 66% that was common before the recession. That 3% difference would raise the total number of unemployed from 12 million to 18 million -- which would also put the unemployment rate at around 11%.


The New York Post's John Crudele, meanwhile, notes that the BLS figure for unemployment including the underemployed actually rose to 14.3% in June from 13.8% the month before.


None of that is great news for the jobless, and all of it suggests that the Fed may want to hold off before it rips the bandage from a supposedly healed economy. When sides that disagree on just about everything concur that the unemployment number is off, maybe it's time for a needed tweak.


More on moneyNOW

151Comments
Jul 19, 2013 3:06PM
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The unemployment rate may be 11 or 15 or 20.

The fact remains that middle America is broke.

Entitlements are going broke or broke.

The US will soon meet the same faith as Detroit.

China is now the #1 super power.

Washington is BRAIN DEAD.

The elderly are abandoned, no money no health care no place to go.

Who cares what the true unemployment rate is. America is in a death spiral.

 

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The real economy is now much weaker today than it was in 2007

 

The fact that 58 million Americans are on food stamps shows that the unemployment problem is a lot worse than it is reported as.

 

There are about 40 million less employed people today than in 2006 so the unemployment rate is really about 25 percent and climbing.

 

The USA is in a Death Spiral of lost jobs and an ever weaker and wekaer economy.

 

The Obama Admin has added almost 1 percent fake monies to the national GDP by introducing a fictious add to the GDP of value added calculations.

Jul 19, 2013 4:02PM
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The actual national debt is closer to $40 trillion when you include all the money raided from Social Security.  Every number put out by Washington is skewed to make them not look quite so incompetent.  Actually incompetent is not the right word.  That should be corrupt.
Jul 19, 2013 3:41PM
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Unemployment is much higher then reported because it does not record discouraged workers or workers who work part time but want full time. The amount of  unemployed and underemployed is much closer to %15-20. Part of this can be attributed to the financial crisis which was the largest shift of income from the poor and middle class to the rich in recent history
Jul 19, 2013 3:50PM
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In other news, the rate of inflation is rather higher than proclaimed, the cost of living is substantially greater than advertised, and the cutoff line for "living in poverty" is not so delightfully low.

 

What part of the national economy do you think is not cooked?

Jul 19, 2013 3:16PM
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Shocker.  And in other news, the sun rises in the east and sets in the west.....
Jul 19, 2013 3:13PM
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"None of that is great news for the jobless, and all of it suggests that the Fed may want to hold off before it rips the bandage from a supposedly healed economy."

 

Bernanke's bandage = Duct Tape over the Nose and Mouth of the Middleclass citizen. FADING FALLING DYING

Jul 19, 2013 3:39PM
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The problem with our economy is that we are shifting away from producing good to providing services and we do not have the education infrastructure to create the skills to fill these jobs. As someone who lives in silicon valley I see the amounts of immigrants who are brought in to do the work that Americans already living here are not qualified for (mainly Asian, Indian, and Middle Eastern). There is a growing divide between low level service jobs paying minimum wage and high skill high paying jobs. Many of the jobs that used to be in the middle and pay a decent wage have been exported due to globalization and other macroeconomic conditions but America need to adjust to the new economy and invest in their citizens. 
Jul 19, 2013 3:41PM
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Another summer of recovery in the small closed minds of the  liberals.
Jul 19, 2013 3:21PM
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If we count those who are- unemployed and under-employed (a higher skill set, degree or certification in a proficiency) and those forced into self-employment because of job and career blockades... the count is more like 90 million. Subtract those over the current retirement age of 65 and those under 16, and the ACTUAL unemployment rate is something like 50%. Looking around the world, no nation is as bad and no nation has a Ben Bernanke funding it's demise by infusing capital in garbage banks that gamble it in manipulated stock and bond markets. An ENTERPRISE does business. A business platform does administration and financial book cooking. When you look at America, you see brands that import, not iconic businesses that built those brands through quality, integrity and cooperation in it's workforce. We have a jobs blockade. They are blocked by loser alumni, political persuasion, false perceptions of wealth and privilege. groups and cliques are destroying the nation. I don't do Twitter. I don't do Facebook. Linked-in is literally an anti-Civil Right machine. We all know it. I write Obama and my Congress about it daily. Time for change. One of the main changes is burning the f'ing crap out of groups. We can recite from a book written 3,500 years ago but we can't decipher a law made yesterday by the worst Congress in America History. TIME FOR CHANGE. Close the banks, end the Federal Reserve, get RID of Wall Street. If we have to take them down brick by brick because they don't get the message, may no person in them be spared. Heal ourselves first. Do it today. Any IDIOT could have dropped $85 billion a month from a plane and caused more economy, recovery and opportunity than all the QE has done. As for the "talent" in business... we know what THAT talent is. Crooked people deserve the worst, not the whole of nation that worked hard, got promised a lot and never got any of it. TIME FOR CHANGE.  

Jul 19, 2013 3:35PM
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I have been out of a job since Dec. 2012.  I have been on numerous interviews and nothing happens.  Not sure what to do and I am not old enough to retire.  
Jul 19, 2013 4:03PM
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According to the BLS the employment rate is 63.5 percent for June.  By the math that I was taught in school that leaves 36.5% unemployed.  (down from the pre 2009 norm of 33%).  This does not include the 30% of the population that are either retired or on welfare or not capable of working.  It does include 20% of the workforce which are not employed full time.  The bottom line is that less than 50% of the civilian population has a full time job. Even though the great recession is over, these statistics show an consistantly increasing number of unemployed, under-employed and unemployable people. Interesting how the government economists are claiming victory when they have no real data to support their claims.  It's called propaganda.
Jul 19, 2013 3:52PM
Jul 19, 2013 4:00PM
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I hate to be blunt but...if you think this is the only fictitious number floating around out there then you have a much larger problem since your going to have to get your head removed from the unholy end of the cow... just sayin....
Jul 19, 2013 4:54PM
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Of course its been a goddam LIE for 5 years now to make obummer look good...
Jul 19, 2013 4:14PM
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well well. they finally throw us a crumb of transparency.
Jul 19, 2013 4:04PM
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Thanks!!! Finally someone brings the issue to the surface.
1) People who do not have a job equivalent to their education and skill (estimated as many as 18mil)
2) Given up No job out there
3) Left the country
4) Went underground (bad, street peddling, hacking, collection enforcers, etc)
5) went back to school
6) Are cought between retirement and meager wage work.
DOL is looking at one spectrum.

Jul 19, 2013 3:51PM
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Call me clueless. But with thousands of college graduates entering the workforce on top of the thousands of unemployed what do we expect? Add to that the great number of jobs that companies have sent overseas. When I was working 15 years ago an entire department was sent to Japan.But we yell and scream and blame the government (which is popular to do)the facts are there only so many jobs available for those wanting to work.
Jul 19, 2013 4:04PM
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Surprise.  Surprise.  The unemployment rate is much higher and the government wants you to believe that the economy is better shape than it is.  What else is new?  Maybe the Dems and Repubs can work together and fix the economy by Sept.  You think? 

Jul 19, 2013 4:40PM
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Congress no longer represents the American people.  To be elected to congress cost large amounts of money and vested interests supply this money, congressman are bought and paid for before they ever take office. Also, it is estimated that for every $1 spent by lobbyists there is a $2200 return on that dollar. The money is just too big. If you look at who benefits from our current economic policy it is the big banks, large corporations and the federal government and the vested interests they protect. Americans we are going to have to face this reality and deal with it. Sorry about that!! The big question is do we have what it takes to deal with this reality????

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