Actual unemployment rate 13.9%: Merrill Lynch

[TimesSquareCowboy]

Source: Financial Week

Actual unemployment rate 13.9%: Merrill Lynch
Counting the ranks of “underemployed” as a result of cutbacks on hours, the unofficial rate hit the highest level in at least 15 years, according to economist David Rosenberg



By Ronald Fink
February 6, 2009 12:48 PM ET

A Merrill Lynch analysis of the non-farm payroll numbers released on Friday makes for disquieting reading, to say the least.

The analysis by North American economist David Rosenberg indicates that the actual unemployment rate, while normally higher than the official one by the Bureau of Labor Statistics, hit a level not seen since at least 1994. The good news: Inflation is not much of a threat as a result.

As Mr. Rosenberg explained, what the official unemployment rate misses is the vast degree of ‘underemployment’ as companies cut back on the hours that people who are still employed are working. Those hours have declined 1.2% in the past twelve months.

The BLS still counts people as employed if they are working part-time, but the number who have been forced into that status because of slack economic conditions has ballooned nearly 70% in the past year, according to the study. Mr. Rosenberg said was that was a record growth rate for the 15-year period he has studied.

When that amount of slack in employment is taken into account, Mr. Rosenberg found that the ‘real’ unemployment rate has actually climbed to 13.9%, an all-time high for the period he studied, and up from 13.5% in December and 11.2% a year ago.


Read more: http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090206/REG/902069980/-1/FWDailyAlert01

---

The article goes on to say that any fears that the stimulus package will lead to inflation are overblown, given the true unemployment rate.

[ShortnFiery]

1. But a High Unemployment Rate is GREAT for Wall Street. ===> Cheap Labor! eom

[Taverner]

2. It's the Republican dream scenario

The Middle Class - Gone

People are destitute, demoralized and desperate

And you can find someone who'd kill a man for $10, and an underage hooker who will work for $5

This is what they fantasize about at night

[CatholicEdHead]

6. Third World Country logic

The ultra rich and the rest in poverty.

[leveymg]

11. Throw in a bunch of senseless death, and you've got the screenplay.

Updated version of "Taxi Driver", with a million obsessed homeless men stalking Republican Senators and investment bankers.

No, I don't think they really want this released on the big screen.

[Lucky Luciano]

14. Not really....It is very fair to say that if the unemployment numbers

were good, then this market would rally in a major way - especially if those numbers seemed like they would continuously improve.

[Telly Savalas]

24. Conversely, if the market truly liked high unemployment

all the major indices would be a lot higher than they were 3 years ago.

[bemildred]

3. I thought they went bankrupt?

Like failed and died? Why are they still putting out statements?

[closeupready]

5. It was absorbed into - I forget who, one of the commercial banks,

and the brand name remains as do many of their people, so I guess symbolically, ML lives, or at least as long as their overlords want it to live.

[stillcool]

7. Bank of America acquired/saved..

Merrill Lynch.

[bemildred]

10. Sort of like dominoes then, one knocks over the next? nt

[stillcool]

17. more like pac-man..

[bemildred]

18. You are right, that's better.

And then the last one bursts like a bubble.

[stillcool]

19. eewww...I've been watching too much...

CSI..I just pictured a bloated corpse exploding.

[DollyM]

4. That does not include others like us who are not on the radar

We are not getting unemployment and do not have jobs so we do not count in these statistics. How many more of us are out there in this position?

[SoCalDem]

8. and , if I recall , MILITARY "jobs" were added into the employment figures

which artifically keeps them higher than they actually are.. Take the military OUT, and then figure the numbers..

[pinqy]

32. Military has been out since 1993. n/t

[nbcouch]

12. How many??

Millions. Literally.

A couple of years ago the NY Times published a good piece on the millions of people who have given up looking for work and dropped out of the labor force in recent years. Some are living with family, some are living off of savings, and still others are living off home equity and other loans - all more or less temporary solutions at best. This trend is documented by the labor force participation rate, which declined steadily under the eight years of BushCo economics. If not for this decline, the miserable job creation performance under BushCo would have resulted in far worse unemployment figures during that regime.

[DollyM]

21. that would be us . . .

no unemployment, savings gone, retirement cashed in, credit cards maxed out, my 80 year old mother is paying our bills and we are "living" with the heat turned off, using just the fireplace to try and keep warm and getting food from the food pantry. What a good life for people who are honest, decent hardworking people who I guess, are just too old (50's) to get a job anymore. Since we don't get unemployment we are not counted in the numbers but we desperately need jobs. My husband has a job interview next week in another state, 8 hours away, we are going to have to call them and tell them we can't make it because we cannot afford the gas and motel to go for the interview. How pathetic is that. Yes, it makes a person just want to give up looking after dozens of interviews, jobs that we use to get with ease. Now I have know clue how to get a job, all the things that once mattered don't seem to anymore. Employers only want who they can get the cheapest anymore, not the best in education, experience, etc. It is so frustrating!

[Waiting For Everyman]

27. You might try the 2010 Census.

Toll free number to apply:
1-800-861-2010 or

Online page: (practice test under "Documents" on the left)
http://2010.census.gov/2010censusjobs/index.php

I'm 59, and they hired me. They're hiring right now in every state.

Flexible hours, good pay rate. You need a car though, unless you live in a city with public transportation.

[DollyM]

34. I know but I am physically handicapped as is my husband.

So the census is out for us. My husband took a greeter job at Wal-mart last year and is diabetic. They would not let him sit down or use handicapped parking even though he had a handicapped parking permit. He developed an ulcer on his foot from all the standing he had to do and ended up in the hospital and had to have part of his foot amputated. Thanks so much Wal-Mart. We need brain jobs, not feet jobs. Those used to be a lot easier to find.

[Waiting For Everyman]

36. Oh, I'm sorry, DollyM. :(

My husband was a disabled vet and also diabetic, so I understand. I wish I had another idea to suggest. However I want to tell you that your dolls are exquisite! I used to be a huge doll fan as a kid, and yours are just beautiful.

[DollyM]

38. thanks for the complement!

It's never to late to start collecting again . . . (subtle marketing hint! LOL!)

[nbcouch]

28. Experience is a liability

That's one of the hard truths I've learned over the last few years. The longer you work for the same company, the more likely you are to be let go. I used to wonder why there are so many "extended stay" hotels springing up all over the place, and then it dawned on me -- that's where the temps stay, the itinerant office workers who make up so much staff at companies who value not the contribution their employees can make and the value they add by staying around a long time and learning the business, but only their workforce "liquidity" and of course the bottom line.

Sooner or later the pendulum swings back the other way. It has in my line of work (information technology) to a certain extent. So many companies that jumped on the offshoring bandwagon got burned big time that some common sense is returning to our labor market, and yet ... my peak year for income over my entire career (28 years) was 1999. In raw dollars I make today about 72% of what I made back then. Adjusting for inflation, you can subtract another 32%, and that's if you accept the "official" inflation numbers, which of course are grossly understated.

But I'm sure I don't have to tell you that. Still, I feel fortunate. I persisted and struggled and yes, suffered through the worst years (2002-4 in particular) in order to keep my career alive, and I was fairly successful at it. Others I know weren't so lucky. They trained their own foreign replacements, or packed up the equipment they once used to make a living and shipped it across the Pacific. They left IT, or perhaps I should say, IT left them.

One word of advice to all jobseekers: look for a company that is a union shop. Even if you wind up in a job there that isn't unionized, chances are you'll be treated much more like a human being than a piece of meat.

Good luck to you. I'd like to believe that with the new administration, things will slowly but surely turn around. Obama has already made it clear, with his salary cap idea (which may be largely symbolic but is significant nonetheless), that the days of laissez faire and carte blanche for the Corporatists are over. Personally I'd like to see a return to a confiscatory top marginal tax rate, not to mention an end to the upper income exemption for the Social Security tax. But we can only hope for so much at one time....

[pinqy]

33. You don't have to receive unemployment insurance to be counted as unemployed.

It's a household survey.

[TahitiNut]

39. Whether or not one collects unemployment compensation has NOTHING to do with the unemployment stats!

I wish people would finally shit-can this urban myth. It's never been true.

[sohndrsmith]

41. That's what I've always been confused about concerning these percentages...

My guess is there are far more of us than most probably realize. If the unemployment numbers accurately included all unemployed people, I think the percentages would be truly staggering.

I guess the people that can't be measured are invisible because - they can't be measured... for various reasons. But it's too bad that there is no way to determine how many are no different than the "official" unemployed, but don't or can't receive unemployment insurance.

Which makes me wonder, too - how do is the definition of "employed" determined? It's not just based on income, is it? It couldn't be. It must be based on tax returns - but I still wonder if there is some sort of filtering process involved, because it can't just be based on income. That doesn't make sense to me, but I'm not very well informed, clearly.

Hm. Well, now I'm curious, anyway.Time for research...

[1Hippiechick]

44. BINGO - These statistics are based on #s of people being PAID unemployment benefits, if I understand

correctly. Not a true reflection of the #s of unemployed.

[pinqy]

47. You don't undersand correctly.

[1Hippiechick]

51. OK - I waded through the Bureau of Labor Statistics - 60k sample households interviewed weekly?

And that's considered "representative" of our entire country (and yes, I read the entire article, include weighting, etc.) I'll sleep better tonight for sure, knowing that this is a "true" picture of unemployment in our country.

http://www.bls.gov/cps/cps_htgm.htm

[ananda]

9. Actual numbers vs. virtual numbers

In actual numbers, I think that the
unemployment rate is at least that.

But there are also the many many
people who are trying to survive
on crappy part time jobs as well.

[Purveyor]

13. Anyone know the basis on which the Great Depression unemployment was figured?

There was no unemployment insurance stats used to create the number as there is today.

I guessing the number was a more 'actual' number than the cooked book numbers we hear today.

[nbcouch]

16. In the 1930s

you were counted as unemployed even if you had given up looking for work, unlike today. I've seen one estimate that puts today's unemployment rate, if calculated the same way as in 1929, at 17.5%.

[pinqy]

31. They didn't have an official unemployment measure in the 30's

When they did start in 1940, you were considered unemployed IF the reason you gave up was because you felt you wouldn't be able to find one or if you felt you weren't qualified. That proved way too subjective a measure and the requirement to have to be looking for work was added in 1967.

[nbcouch]

40. Yes, they did

What nonsense ... there had been official unemployment estimates for decades, derived from surveys of businesses, when in March 1940 the WPA began a monthly survey of households that was thereafter used to estimate the number of unemployed. The methodology changed in 1940, but there were official estimates as long ago as 1915. And the survey counted a person as unemployed only if they had been looking for work in the previous week as long ago as 1945.

http://www.bls.gov/opub/mlr/1984/06/art2full.pdf

[pinqy]

45. Did you even read the article you linked?

During the Great Depression it became obvious to polcymakers that accurate statistical information on unemployment and related problems was unavailable....But throughout the worst years of th e depression, no one knew how many unemployed persons there were, much less their characteristics.

Employment was published since 1915, UNemployment wasns't consistantly measured until 1940.

[nbcouch]

58. Yes I did - did you???

Unemployment was most certainly estimated and reported on as early as 1915 (the number of employed persons was surveyed, and as the size of the working age population was also known, so could the number of unemployed be estimated). What changed in 1940 was that a survey method for estimating it directly was adopted. More importantly, the fact remains that only those actively seeking work were counted as unemployed as long ago as 1945.

[pinqy]

60. So you're saying the article is contradicting itself

When it says "no one knew how many unemployed persons there were"

And nowhere in the article does it say that "he number of employed persons was surveyed, and as the size of the working age population was also known, so could the number of unemployed be estimated" That work was done, but not at the time. Yes, prior to the 1937 Census survey there had been some attempts, but there was no coherent definition or any usefullness to the estimates.

As for your claim that "the fact remains that only those actively seeking work were counted as unemployed as long ago as 1945." I direct you to Employment and Earnings July 1960

Unemployed Persons comprise all persons who did not work at all during the survey week and were looking for work, regardless of whether or not they were eligible for unemployment insurance. Also included as unemployed are those who did not work at all and (a) were waiting to be called back to a job from which they had been laid off; or (b) were waiting to report to a new wage or salary job within 30 days (and were not in school during the survey week); or (c) would have been looking for work except that they were temporarily ill or believed no work was available in their line of work or in the community. Persons in this later category will usually be residents of a community in which there are only a few dominant industries which were shut down during the survey week. Not included in this category are persons who say they were not looking for work because they were too old, too young, or handicapped in any way.

The "would have been looking" category was dropped in 1967 and those people "discouraged workers" are now considered "Not in the Labor Force" and a subset of the Marginally Attached.

[nbcouch]

61. No, I would not say

self-contradictory. I would say that the statement "no one knew how many unemployed persons there were" is a gross oversimplification, as is your statement "there was no coherent definition or any usefullness to the estimates."

Surveys were done to estimate the number of employed persons. The size of the working age population was known from census data. Therefore, an estimate of unemployment based on those two numbers could be derived. Was this a less useful or accurate estimate than those done from 1940 on (including the ones done in 1945 when the question was asked "were you looking for work last week?")? Without doubt, but this is not to say that even today's estimates are accurate by any objective measure of accuracy. Self-report surveys, which are the basis for today's unemployment figures, are notoriously unreliable.

But it's probably better than nothing.

[AZ Criminal JD]

20. Unemployment insurance stats are not used to get the unemployment number

It comes from polling in the 50 states which is done by the U.S. Dept. of Labor.

[DollyM]

22. no one asked us!

eom

[pinqy]

48. Do you not understand the concept of a poll?

[nbcouch]

62. It's not the concept of a poll

that people have trouble with, but rather the concept of sampling. A poll, after all, can cover an entire population. The poll, or survey, used to generate unemployment figures covers a sample of a population, and its accuracy is limited by the sampling error - the extent to which the sample is likely not to reflect or represent the population.

But as I've noted in another post, we're talking about accuracy within the domain of self-report questionnaires, so throw big reliability issues into the mix as well. What people fail to understand about such survey numbers as the unemployment rate is that they are estimates ONLY. The intent is NOT to survey every last individual in the population.

[pinqy]

30. unemployment insurance is not used to create the numbers today.

In the 30's, they didn't really calculate unemployment. Employment had been measured since 1915, but there was not even a real definition of "unemployed." The first real attempt at measuring unemployment was in 1937 when the Census did a mail survey. The first household survey began in 1940.

The official numbers for the 20's and 30's were first published in 1948.

[nbcouch]

63. Getting back to the original point...

It has been widely claimed (e.g. http://www.bls.gov/opub/cwc/cm20030124ar03p1.htm) that unemployment during the Depression peaked at around 25% in 1933, and stayed in double-digits throughout most of the 1930s. But these are relatively recent estimates derived from a variety of contemporary sources, e.g. Labor in the Twentieth Century, Dunlop & Galenson, 1978. I'll concede the points that (a) estimates of unemployment made DURING the 30s were less "scientific" than those made today, and (b) there weren't official government estimates of unemployment in the 30s published at the time, except perhaps the postcard survey done in 1937.

Any way you look at it, comparing unemployment rates today with those during the Depression is to a certain extent an apples-to-oranges exercise. The numbers have marginal value at best, outside of year-over-year comparisons. Today we have no fewer than six official government estimates of unemployment, called U-1 through U-6, with U-3 being the measure most often cited. Is the methodology used to estimate that 25% rate during the Depression roughly analogous to, say, U-6, the broadest measure of unemployment tracked by the BLS? I do not know, but currently the seasonally adjusted U-6 stands at 13.9% (http://www.bls.gov/news.release/empsit.t12.htm), so it seems safe to say we are not yet in Depression-era territory.

It may be worth noting that while collecting unemployment insurance benefits does not in and of itself mean you are counted as unemployed in the government's statistics, it is true that you must be actively looking for work to collect UI benefits AND to be counted in U-3. This, and the fact that the government does report on new weekly UI claims, may be the source of the confusion over how the unemployed are counted relative to the UI rolls.

[defendandprotect]

15. We're way more than 13+% unemployment . . .

There were many changes to information gathered for reporting which have

distorted the figures . . .

[KillCapitalism]

29. I'd have to agree with that.

I thought 13% seemed a little low too. I would think 18% would be more like it.

[pinqy]

49. Such as?

[indypaul]

23. Lest we forget

in millions of households the unemployment rate is
100%. That is the shame of this entire situation and there
are legislators who will sit around and watch this situation
worsen and believe nothing should be done. We must not let
this stand and do nothing ourselves. Contact your state general
assembly person, your congressional representative and your
states senators. Let them know that doing nothing is not
acceptable and sitting on their hands will force members of
those households into actions we shall all deplore and may
lead to conditions in this nation that we shall all regret.

[ElsewheresDaughter]

25. In Indiana it's above 17%

[DollyM]

35. Ironically, we have found more job opportunites in Indiana than anywhere else!

My husband has had two job interviews in Indiana in the last couple of weeks and I had an employer in Indiana contact me about a resume I had sent them. I think it depends upon the type of jobs you are seeking. If we wanted to work in a factory, Indiana is not the place to be but it seems there are more opportunities for professional jobs there. We live in southern Illinois and there are no opportunities of any kind here, professional or otherwise. It's just terrible! WalMart is about the only one who employees anyone here. You see graduates of the local community college working at Wal-mart becasue they can't find jobs locally in their field of education.

[midnight armadillo]

26. Don't forget the millions warehoused in prisons

[GreenTea]

37. Kick

[Delphinus]

42. I want this on the front page

of every newspaper and the lead story of every newscast.

And my guess is that 13.9% doesn't even take into account those who have given up looking.

[1Hippiechick]

43. Aren't these unemployment statistics based on #s of ppl DRAWING unemployment? And, once no longer

drawing, they are no longer part of the unemployed statistics?

[pinqy]

46. NO!

The national unemployment rate has NEVER been linked to unemployment insurance in any way.

[1Hippiechick]

52. OK! As I stated above, I have since waded through the morass of the BLS, a great acronym for

B*LLSHIT, I might add. 60k households 'representing' the entire country?!? Gimme a break.

[pinqy]

53. Take a statistics course then

Just because you don't understand how something works, doesn't mean it doesn't.

[1Hippiechick]

55. I read the entire BLS article. It is very SIMPLY stated how it 'works'. The problem is not my

understanding. The problem is that I DO understand how it works now, and that is discouraging.

[pinqy]

57. You clearly don't

if you think 60,000 households isn't a good sample size. It is.


What sample size would you prefer and how should we pay for it?

[4lbs]

50. What I do is take the "official published" rate for any state or the nation, and double it. That

seems to very closely match the sentiment and real-world findings.

The "official" number doesn't include those who have been unemployed for more than a year, but are still wanting to work.

So, current national unemployment is 7.6%. Double it for 15.2% actual.

[pinqy]

54. You're wrong

The official number doesn't have any time limit on how long you've been unemployed. You just have to actually be looking for work. If you're not looking, how can you be considered to be participating in the labor market.

[Name removed]

56. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Orwellian_Ghost]

59. Real unemploymeny figures