December 7, 2008

Counting Those Who Have Given Up on Employment

The following is a revised version of my June 7, 2008 post.

Peter Goodman writes...

The unemployment rate does not count people who have given up looking for work. Over all, the percentage of working age Americans employed dropped to 62.6 percent in May from 63 percent a year earlier.

That means nearly 40% are unemployed. Even if one argues that 10% of these unemployed people are unemployable, due to health or other legitimate reasons, the real unemployment figure in the US is closer to 30% not 5% as we are lead to believe.

The figure below, which shows the percentage of adults employed, verifies the rough 40% figure. Some might be thinking, "How can these numbers be so different than the government statistics?" Kevin Phillips' book Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism explains how. Chapter 3, entitled, "Bullnomics: Favoratism and Fictions," outlines the manipulation of key economic indicators and the implications. For example, many cost-of-living adjustments are tied to government inflation statistics. By keeping the inflation statistic artificially low, retired people's cost-of-living adjustments are suppressed.

Goodman's Article is worth reading. The in the New York Times publication of his article is a rare example of the establishment media acknowledging a distinction between the Main Street economy and the Wall Street economy. (Rembember comment was written in June 2008 before the meltdown).

Psssst... Do Something


New York Times, Job Losses and Surge in Oil Spread Gloom on Economy, Peter S. Goodman, June 7, 2008.

Lead to St. Louis Fed graphic: Paul Krugman's December 6, 2008 blog post.



libhom said...

I am skeptical that these people really have given up. It's always sounded fishy to me.

GDAEman said...

The estimate is about 12% when you count those who have given up, according to DemNow.

A friend told me there are lots of former auto workers in Mich who gave up over a decade ago. Their wives might work. They do little things under the table. But for the most part they are part of a gray market economy.