Government on Unemployment Rate

I am currently baffled as to how government in general explains the unemployment rate to the great people of this nation. Under the current release and description we use the U3 section of the which according to the Bureau of Labor Statistics is described as “Total unemployed, as a percent of the civilian labor force”. I know what most people are thinking…So what? What does that even mean? Why is it a bad statistic?

Dont worry, Ill tell ya, but first let me explain how the U3 number is calculated. The BLS takes the total number of calculated unemployed in the labor force (which is described by the BLS as individuals 16 years and older who are either working or looking for work), and divides it by the entire workforce. So again to repeat that is UnemployNLaborforce/Laborforce=U3. Now that all sounds like its great, and makes sense with out digging a bit deeper. I mean most people look at and go ya that sounds like how the math would break down… But unfortunately there is, in my opinion, ONE MAJOR FLAW to this calculation.

The first flaw, again in my opinion, is that it totally alienates those who want work but have given up looking, because they are not included in the workforce, since the workforce is all individuals 16 years and older who are actively employed or looking for employment. Now why does this matter, well let us take a look at the most recent unemployment rate reported on Sept. 7th, 2012 for the month of August 2012, mind you that the U3 unemployment rate was at 8.3%.

• According to the Bureau of Labor Stats, there were 96k jobs added in August 2012 and there was a loss of 368k people from the labor force and the U3 dropped from 8.3% to 8.1%
• There for simple math would show that 96k-368k= negative 272k people.

So more people left the labor force, than got jobs and somehow the “official” unemployment rate decreased? How can that be possible. There is the same amount of people who are unemployed, but simply because they no longer have faith in finding a job that they are educated for or capable of, they are discounted as a statistic. And an important statistic at that?

I mean to show how drastic the numbers were in this recent report, think of it like this, almost 3/4ths of the people leaving the labor force are unaccounted for when you take into account those new people who did become employed… insanity! Then government trots out this lower number and claims that it is a sign of a stabilizing economy? Please…

The number being report to the poeple should be the BLS’s U6 which is describe as this “Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force” on the Bureau’s webpage. (marginally attached to labor force means, those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months) So it will not only account for those who arent looking for work but can, but it will give the citizens a more honest number of what the unemployment rate is during times of a poor economy. If that report on Sept. 7th, 2012 reported the U6 it would have been at 14.7%. It may paint a more bleak picture of life, but I think its time for more adult conversations, not only from government to the people but the people to the government, hell even between two citizens! Government should no long get to pick and choose the number it feels it can soften the most, or blind the people with the most. We should be smarter than those we elect and keep them honest, for they are our employees, not the other way around. They owe us, we dont owe them. Lets hope the future not only on the employment front but in all the fronts of the economy decide to start talking straight and stop hiding the truth. For the truth may hurt at first, but it is necessary to begin the healing process.

http://www.bls.gov/news.release/empsit.t15.htm

http://data.bls.gov/cgi-bin/surveymost