Monday, May 16, 2011

Reflections on the (Real) Unemployment Rate

According to the Department of Labor the unemployment rate is 8.7%. Evidence abounds that this number is artificially low and largely reflects the disingenuous manner in which the government calculates the rate. To start off with they count the rate of job seekers who are unable to obtain employment and exclude the growing number of individuals who for lack of opportunity or desire have stopped looking. Furthermore, the expanding number of individuals who legitimately and illegitimately receive disability benefits are not counted. In fact, the number of applicants for disability benefits increased by 27% in just 2 years.

This is not just the perspective of "right wing nuts," in 2003 President Obama's economic advisor Austan Goolsbee published an article discussing how the government "cooks the economic books" for its political benefit. Using a more conventional definition of unemployment the Christian Science Monitor calculated the rate at 16.7% and the fascinating website arrived at the figure of 21.5% If we included superfluous public sector workers, excess military personnel and the incarcerated, these figures would be even larger. When fiscal realities force the government to cut its bloated ranks, a significant portion of these workers will make their way to the ranks of the unemployed.

A recent report issued by the Labor Department points in this troubling direction; it stated that the employment rate for white males is 68.1% and for African-American males that figure is a shocking 56.9%. When we include women in our calculations, the employment rate further drops, but it is difficult to determine what portion of this group is comprised of women who choose to stay home with their children. Arriving at the true number of Americans who are unable or unwilling to obtain employment is a vital task if we are to formulate wise economic, welfare and immigration policies. But I doubt that "change we can believe in" will include changing how we calculate unemployment.

Employment rate for black men at record low

By Zachary Roth
May 10, 2011
Yahoo News

If the election of America's first African-American president was expected to give blacks an economic boost, it hasn't emerged yet. Indeed, the percentage of African-American men with a job has dropped to its lowest level since records began in 1972, according to the government's monthly jobs report released last week.

Even as the economy added a better-than-expected 244,000 jobs, the percentage of black males over 20 who are currently employed dropped slightly to 56.9, the Labor Department's April report shows. For whites, the equivalent figure is 68.1 percent.

Before this recession, the percentage of black adult men with a job had never dropped below 60 percent, according to Labor Department statistics.

And among blacks, it's not just men who are suffering. Just 51.5 percent of African-Americans across the board--compared to 59.5 percent of whites--have a job, the numbers show. That's the lowest level for blacks since 1984. (That group includes 16- to 19-year-olds, who are employed at a far lower rate than their elders.)

These employment rates are calculated differently from the top-line unemployment rate, which includes only those actively looking for work, and inched back up last month to 9 percent.

Heather Boushey, an economist with the liberal Center for American Progress, told The Lookout it's not just African-Americans who have been hit particularly hard. It's also other traditionally struggling groups, such as ex-offenders and those without a college degree.

"Anyone who would be last on an employer's list to get a job is really in bad shape" in the current downturn, Boushey said.

And employers' hiring practices may be making the problem worse. As we've reported, online job listings telling the unemployed not to apply have proliferated in recent years. The federal government is currently probing whether such listings illegally discriminate against African Americans, who are disproportionately likely to be among the jobless.

Nonetheless, much of the media has focused on the travails of educated white men--still a comparatively flourishing group--during the downturn.

(Faye McWilliams Pearson, a volunteer at Miami's Pass-It-On Ministries, left, works with Douglas Willock, center and Stephen Smith, both unemployed, giving them information about job fairs and a box of food that will last a week: J Pat Carter/AP)

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