Unemployment measurements changed over time?

[laurence]

So I keep hearing that we measure unemployment differently now than during the great depression. I googled and found this amusing visual display:

Current Unemployment Rate & Statistics 2009 - Job Layoffs, Loss | Mint.com Blog | Personal Finance News & Advice

But it doesn't exactly cite it's source. According to this link if we highlighted the "U6" unemployment number instead of the "U3" we'd be at 13.5% unemployment, and if we measured the same way we did during the great depression, it would be 17%+.

So how accurate is that? What's being left out? We hear the doom and gloom, but so far my circle of family and friends has waaay less than 1 in 5 unemployed, more like 1 in 10 underemployed, but at least with some sort of job. I'm not refusing to believe the government would spin numbers positively, but if the above claims are true, where are the breadlines and hoovervilles?

 

[ziggy29]

Well, my wife never got around to looking for a new job when we moved here almost three years ago and she wasn't laid off from a previous job, so now that's spent several months looking and finds nothing at all, I suspect she is not included in any unemployment statistics, but as far as we're concerned, she's unemployed because she's actively looking for a full-time gig and can't land one.

I trust government unemployment numbers about as much as their inflation numbers.

 

[Bimmerbill]

From what I recall, they stop counting you once you get done with unemployment benefits.

 

[youbet]

But it doesn't exactly cite it's source. According to this link if we highlighted the "U6" unemployment number instead of the "U3" we'd be at 13.5% unemployment, and if we measured the same way we did during the great depression, it would be 17%+.

So how accurate is that? What's being left out? We hear the doom and gloom, but so far my circle of family and friends has waaay less than 1 in 5 unemployed, more like 1 in 10 underemployed, but at least with some sort of job. I'm not refusing to believe the government would spin numbers positively, but if the above claims are true, where are the breadlines and hoovervilles?

17% doesn't pass my common sense test. If it's actually that high (if measured the same way they were measuring it during the Depression) where are the soup kitchens, the mass demonstrations in Washington, The CCC, the lines of hundreds waiting to apply for a single low wage job, vagrants knocking on my door for a sandwich, etc.? Here in the Chicago suburbs, I'm still seeing help wanted signs in the windows of fast food joints and big box stores. Instead of folks waiting in lines for crappy jobs, we have folks waiting in line for hours to buy outrageously expensive ticket packages to Cubs games!

Note: I'm not saying that the job situation might not get as bad as the Depression, just that it certainly hasn't reached that staggering level yet, not even close.

 

[youbet]

Well, my wife never got around to looking for a new job when we moved here almost three years ago and she wasn't laid off from a previous job, so now that's spent several months looking and finds nothing at all, I suspect she is not included in any unemployment statistics, but as far as we're concerned, she's unemployed because she's actively looking for a full-time gig and can't land one.

I trust government unemployment numbers about as much as their inflation numbers.

If I recall from your other posts on this subject, she's looking for a job with benefits as a backstop to yours and for reasonable pay for work in her field. I don't think it's reasonable to count her as "unemployed" in the same way that Depression era out of work folks were "unemployed." Back then, hungry and desperate for life's basics, she'd be waitressing part time at the local diner and gladly putting the chairs on the tables and mopping up after closing.

There's unemployed as in "can't find what you want" and there's unemployed as in "can't feed the family and the kids are going to bed hungry."

By your proposed definition, I guess I'm "unemployed" too. I was laid off 2.6 yrs ago and collected unemployment for six months. Since then, I've become a discouraged job seeker no longer actively hunting for jobs.......... but I'd accept the "right opportunity!"

 

[ziggy29]

There's unemployed as in "can't find what you want" and there's unemployed as in "can't feed the family and the kids are going to bed hungry."

I would agree; it's not a desperate situation here, but nevertheless it is still unemployment. I don't think level of desperation is a factor in the statistics.

 

[youbet]

I would agree; it's not a desperate situation here, but nevertheless it is still unemployment. I don't think level of desperation is a factor in the statistics.

No, but it's a factor of the pain involved.

 

[ziggy29]

No, but it's a factor of the pain involved.

Okay, maybe it shouldn't be included in the "misery index," but it's still unemployment.

Of course, if I were laid off, the "pain" would suddenly be there, but it wouldn't impact whether or not she was considered "unemployed."

 

[youbet]

OK........ your wife and I are both unemployed and not being counted as such. Due to the state of the economy, I think the unemployment compensation rules should be changed so that we both can collect (I miss those almost $400/wk checks!!) and perhaps receive some other well deserved benefits!

 

[OAG]

If you get laid off or otherwise lose you job but DO NOT apply for unemployment benefits I suspect you are not counted in any Government Unemployment numbers. Like wise they have a newer number called the UNDEREMPLOYED I wonder how they decide who gets counted there - I suspect if you ask 100 individuals, at random, most would say they are underemployed since they think they should be paid more and could be called underemployed. The other Government number that I have always suspected as somewhat bogus is the UNINSURED (health and auto insurance); since I think if they looked the number would be lower if they subtracted those that could purchase the insurance but chose not to. Statistics - given enough numbers, enough spinning, your position, and they can be made to support it.

 

[FUEGO]

In my industry, I would say more folks than not are underemployed. Most firms have gone to 80-90% of former pay with 32 or 36 hour workweeks or some sort of 5 weeks on, 1 week off furlough or other type of furlough (2 weeks unpaid at xmas for example).

And many firms have laid off 20-50-75% of their workforces. But among my friends in the industry, I really don't know any currently unemployed. In fact, many competing firms are still hiring and are busy. Just a bumpy turbulent ride for some individuals who get let go. I do know of some of my family and friends that lost their jobs in the last year in this industry or closely related industries, but they all found new jobs by now.

I'm sure some stubborn folks who remain unemployed are still thinking "I'm worth every cent of my former six figure salary, paid company car, and expense account, now gosh darn it why can't I find a new job?!?!?". How do you count those people?

If I got laid off tomorrow, I'd probably take a year off and just collect the dole check and work on a personal project I have going. Would I be "unemployed"?

 

[ziggy29]

If I got laid off tomorrow, I'd probably take a year off and just collect the dole check and work on a personal project I have going. Would I be "unemployed"?

Well, if you were collecting the "dole check," presumably you'd have to be looking for a suitable job and accept an offer that's a reasonably good fit for your skill set and work history. If you didn't do these things I don't think you could get a "dole check."

But you could still get 65% off of your COBRA for nine months...

 

[youbet]

Well, if you were collecting the "dole check," presumably you'd have to be looking for a suitable job and accept an offer that's a reasonably good fit for your skill set and work history. If you didn't do these things I don't think you could get a "dole check."

But you could still get 65% off of your COBRA for nine months...

Don't know how it works in Texas Zig, but here in Illinois most folks are never checked for job hunting activity while collecting unemployment benefits. While I was collecting, just to be safe, I occassionally applied for a job or two via the internet with an out of date resume using Monster.com. I printed the email responses that they had recieved my application and tossed them in a folder just in case. I doubt if I invested over two hours in six months and was never questioned anyway. In fact, I never even had to go to the unemployment office in person or even talk to them on the phone. It was all hadled via the internet. Nice.......

I'm not usually a fan of big gov't or making benefits too easy to collect, but in this case I have to say it was quick and easy and I enjoyed the heck out of getting these checks. The web site and associated forms were straight forward and I filled them out while I was still working to be sure I'd have easy access to any info I'd need. Checks started coming right away and all I had to do was make an automated phone call every two weeks to have them continue. "If you want us to send another check, press one. If you want us to stop sending checks, press two." It was great!

 

[laurence]

I'm not too concerned with a method that is slightly off base, just that the same off-base method is used so the delta is valid. But that 17% number has to be bogus, for now.

 

[Tadpole]

Bls january numbers

So I keep hearing that we measure unemployment differently now than during the great depression. I googled and found this amusing visual display:

Current Unemployment Rate & Statistics 2009 - Job Layoffs, Loss | Mint.com Blog | Personal Finance News & Advice

But it doesn't exactly cite it's source. According to this link if we highlighted the "U6" unemployment number instead of the "U3" we'd be at 13.5% unemployment, and if we measured the same way we did during the great depression, it would be 17%+.

So how accurate is that? What's being left out? We hear the doom and gloom, but so far my circle of family and friends has waaay less than 1 in 5 unemployed, more like 1 in 10 underemployed, but at least with some sort of job. I'm not refusing to believe the government would spin numbers positively, but if the above claims are true, where are the breadlines and hoovervilles?

Table A-12. Alternative measures of labor underutilization

HOUSEHOLD DATA HOUSEHOLD DATA Table A-12. Alternative measures of labor underutilization


http://www.bls.gov/news.release/empsit.t12.htm



BLS introduces new range of alternative unemployment measures

John E. Bregger
Assistant Commissioner for Current Employment Analysis (Retired), Bureau of Labor Statistics
Steven E. Haugen
Economist, Division of Labor Force Statistics, Bureau of Labor Statistics

BLS introduces new range of alternative unemployment measures (ABSTRACT) Monthly Labor Review Online, Oct. 1995

 

[FUEGO]

Well, if you were collecting the "dole check," presumably you'd have to be looking for a suitable job and accept an offer that's a reasonably good fit for your skill set and work history. If you didn't do these things I don't think you could get a "dole check."

But you could still get 65% off of your COBRA for nine months...

Oh yeah, there is technically a requirement to be actively searching for a job and accepting if one is offered. And I would comply with state and federal law in this regard without doubt. In fact, I would probably devote a good bit of time and effort to determining what exactly the legal minimum compliance requirements are and doing just that.

But when it comes down to "press 1 for another check, or press 2 to discontinue future checks", I'll be pressing 1 for a while.

I mean, I can't help it if no one hires me because I wear shorts to the job interview and "accidentally" forget to shower and shave for a week prior to the interview. And my salary expectations have doubled since my previous employment. Those are all events outside of my control.

Where there is a will, there is a way, my friend. I am the moral hazard.

 

[FUEGO]

I guess I may be able to buy into the 17.5% number. I suppose that number would include folks who have figured out life is sweeter on the dole than working. Or the intentionally unemployed or underemployed. Or someone who's highest earnings potential would put them around the minimum wage plus a little may find better terms in the informal market - technically unemployed and part of that 17.5%?

 

[ERD50]

Or maybe the real number is close to 50%?

After all, the bottom ~50% of filers pay no federal income taxes (and then there are the credits that aren't counted). If they are gainfully employed, and making money, shouldn't they be contributing to the needs of the country?


While ziggy's story reflects a weak economy, I agree with others that there is a huge difference between 'I can't find any job anywhere to put food on the table' and 'I've chosen to be out of the workforce for three years, and now I can't find a job in my chosen field with benefits' (I think that's a rough summary?). Not to diminish mrs ziggy's situation, but it is just a big difference.

OTOH, I wonder how accurate a picture we get of the Depression from those old photos and newsreels we've seen, and stories from the old folks.

-ERD50

 

[BunsGettingFirm]

Thank goodness I have actually worked at McDonald's plus other crap jobs too numerous to name. I guess when you started out as a cockroach, you can always go back to being one.

Heck, with my current job, there are days I feel that it ain't but 2 steps above working at McDonald's minus the slutty girls. Hey, maybe I'll work at McD's for a couple of weeks and then show up at a presidential town hall meeting and rant and rave a bit. I wonder if it will lead to new career opportunities.

 

[mf15]

I voluntary ER'ed so here in Pa they would not give it to me, but what this really was
by the company was a reduction in force. So I am probably not counted.
Old Mike

 

[Independent]

So I keep hearing that we measure unemployment differently now than during the great depression. I googled and found this amusing visual display:

Current Unemployment Rate & Statistics 2009 - Job Layoffs, Loss | Mint.com Blog | Personal Finance News & Advice

But it doesn't exactly cite it's source. According to this link if we highlighted the "U6" unemployment number instead of the "U3" we'd be at 13.5% unemployment, and if we measured the same way we did during the great depression, it would be 17%+.

So how accurate is that? What's being left out? We hear the doom and gloom, but so far my circle of family and friends has waaay less than 1 in 5 unemployed, more like 1 in 10 underemployed, but at least with some sort of job. I'm not refusing to believe the government would spin numbers positively, but if the above claims are true, where are the breadlines and hoovervilles?

I agree with the breadlines comment.

The gov't currently publishes six different unemployment numbers every month. Before 1995, they published seven. This link talks about the change http://www.bls.gov/opub/mlr/1995/10/art3full.pdf

But the "old" system goes back to the 1940's, it started after the depression. I haven't been able to find how they counted during the depression. I did find a couple references to including people on "work relief" as unemployed. I believe that refers to people who were employed by the WPA and similar programs.

The only source I can find for the 17.5% is John Williams at "Shadow Statistics". He makes his money by selling a subscription to a service that tells you the gov't is lying to you. I spent some time there last year, trying to figure out where he gets his inflation number. He refuses to disclose his "method". So my guess is that there isn't any basis for the unemployment number, either.

 

[jdw_fire]

So I keep hearing that we measure unemployment differently now than during the great depression. I googled and found this amusing visual display:

Current Unemployment Rate & Statistics 2009 - Job Layoffs, Loss | Mint.com Blog | Personal Finance News & Advice

But it doesn't exactly cite it's source. According to this link if we highlighted the "U6" unemployment number instead of the "U3" we'd be at 13.5% unemployment, and if we measured the same way we did during the great depression, it would be 17%+.

So how accurate is that? What's being left out? We hear the doom and gloom, but so far my circle of family and friends has waaay less than 1 in 5 unemployed, more like 1 in 10 underemployed, but at least with some sort of job. I'm not refusing to believe the government would spin numbers positively, but if the above claims are true, where are the breadlines and hoovervilles?

i dont know the validity of the 17%+ number but a few things are different now relative to the GD which cud potentially explain the lack of "bread lines and hovervilles" and they are 1) prior to both crashes there were significantly more 2 income housholds now then in the GD so a loss of 1 job in a household wud not mean that household is without funds but wud raise the unemployment rate, 2) unemployment insurance and 3) welfare

 

[Gone4Good]

If anything the Great Depression unemployment statistics seems understated compared to what we're seeing now. I wonder if the guys selling apples on the street corner were considered "employed".

 

[Gone4Good]

Interesting reasoning in this thread . . .

"In my circle of friends and family the unemployment rate is much lower than 20%. Looking around my town and even on the news, unemployement lines don't seem that extreme. But I guess a bunch of people have been laid off, and the market is down a ton. The government says unemployment is only 8.5%, but the government always lies . . . so unemployment must be worse than it was during the depression."

 

[HFWR]

Gumment stats - CPI, GDP, unemployment rate, etc. - are probably better for tracking trends than providing a "real" number.