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The American unemployment rate could be as high as 20 percent rather than the 6.1 percent the US Labor Department’s Bureau of Labor Statistics (BLS) reported for June.
Many economists and financial experts believe that the BLS deliberately underreports unemployment figures in order to make the economy look better than it really is.
The problem is that it is almost impossible to tell what the real employment and unemployment rates are because of the way the BLS counts the jobless. The bureau only counts persons who are actively looking for a job as “unemployed.” Jobless workers who get discouraged and stop looking are no longer called unemployed.
The BLS said the unemployment rate declined from 6.3 to 6.1.
“It didn’t go down because the unemployed found jobs. No, it went down because the unemployed stopped looking, they threw in the towel and they left the labor force,” radio show host and investment expert Peter Schiff said earlier this year about the unemployment rate. “Hundreds of thousands of Americans left the labor force. The labor force participation rate is at a new low for this period. It’s as low as it was in 1978.”
All Jobs Treated the Same
The actual rate Americans should look at is around 14.3 percent, Forbes writer Dan Diamond believes. Diamond arrived at that number by adding those who drop out of the labor force and the underemployed.
For Those Who Desperately Want Out Of The Rat-Race But Need A Steady Stream Of Income
The number of labor force dropouts or what is called the U-6 unemployed actually increased by .5 percent in June, Diamond noted. Like a number of critics, Diamond faults the BLS for not counting the underemployed.
The BLS also regards all jobs as the same in its counting procedures, so if a person loses a high-paying factory job then takes a part-time position at McDonald’s, the BLS counts him as “fully employed.” That person is regarded as employed even if he has to go on food stamps to feed his family.
This is why some observers believe the real unemployment rate is far, far high. For instance, the BLS released data in April showing that 20 percent of all American families have no one employed. If that figure is used, the real unemployment rate is three times the official BLS number.
Experts Say Figures are Skewed
Additionally, the number of people forced to move from full-time to part-time work rose to 7.5 million, according to the BLS’s latest report.
Wages are increasing 2 percent, which is less than the rate of inflation (2.3 percent). That means the average American’s pay is shrinking.
Schiff believes that the labor force participation rate is a better measure of the number of the unemployed. The BLS further skews the number by counting those drawing unemployment benefits as part of the labor force even though they are not working, Schiff pointed out.
“For all the talk about the job creation and the economic recovery in 2012, the US economy actually added fewer jobs in 2013 than it did in 2012,” Schiff said.
Schiff’s statements are echoed by Walmart chief executive officer Bill Simon. Simon told Reuters that customer spending at his chain’s stores has not increased despite the figures reporting increased hiring. Simon also said the economy is not getting any better for Walmart’s core customers.
Do you believe the economy is recovering or still in a recession? Tell us your thoughts in the comments section below.
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