It’s a game and the game is rigged…

clip_image002…It’s a game and the game is rigged…

 UNEMPLOYMENT RATE IS RIGGED

 

07-14-2017 • http://thelibertarianadvisor.com    When Obama took office, the unemployment was double digits, and now eight years later we find ourselves sitting at 4.3%.  Pretty hard to argue with those numbers… or is it?

Like most things in politics there is usually more behind the numbers than what meets the eye.

When looking at a chart of the unemployment rate for the past 10 years, it looks like we’re in a pretty good spot economically.   However, this rate known by economist as the U3 rate, gives a very narrow definition of unemployment and its calculation methodologies have been changed throughout the years.

U3 is also referred to as headline unemployment aka the number you see in the newspapers.

Did you know that once you’ve been unemployed for more than 1 year, you actually don’t count as being unemployed anymore? 

That’s right, you can be unemployed and not be counted as unemployed.   Actually, to not be counted as part of headline, you simply have to have not looked for work the previous 4 weeks.

So if you’ve been looking for months and can’t find anything meaningful and you become discouraged you can now find yourself counted in the U6 rate.    If this persists for more than 1 year, then you fall off u6 as well.

But what I think is the most egregious examples of how the unemployment rate is skewed is the following scenario:

Let’s say George used to be an engineer making $125,000 and George was laid off.  After not being able to find work George is now forced to take a job as a waiter and another as a bar tender.   Even if George is now making a fraction of what he used to make he actually now counts as two jobs to the economy vs the 1.  So in essence even though George is at a major net worse position the unemployment rate would benefit from his position.

Time after time you see the hospitality sector as the one sector gaining the most amount of jobs and sometimes government.  We can only have so many college educated waiters and waitresses. This is not a knock on anyone’s profession but rather an illustrative result.

My favorite source for reliable economic information is http://www.shadowstats.com .  They publish information on unemployment, inflation, money supply, etc.  What makes their site unique is that they not only include the headline numbers but also include prior methodologies for how the government used to collect statistics.  Read Full Story

 

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