(c) 2012 Earl L. Haehl Permission is given to use this article in whole as long as credit is given. Book rights are reserved.
So the unemployment rate dropped below 8 percent. October surprise? We will not know whether this is a sign of recovery for another six to twelve months. This is, of course, a figure that both parties will spend time spinning this figure. (How many campaign spinners will be out of work on 7Nov?) But how much does the figure really mean.
The unemployment rate is based on the number of individuals in the Civilian Work Force unemployed as opposed the total number of persons in the Civilian Work Force. This latter figure is the number of persons ages 16 through 64 minus undocumented aliens, military and naval personnel, the incarcerated, full time students, those committed to mental institutions, those working part time, the disabled (under SS guidelines), those who have ceased seeking employment and those whose unemployment benefits have expired.
I have heard estimates that the “actual” unemployment rate stands anywhere from 11 to 28 percent. Without actual figures there is no way to state an actual percentage and the Bureau of Labor Statistics numbers are, however flawed, what we have to work with. The interesting thing is that both the right and left actually defend or attack BLS depending on who is in office. I have been told by Republicans that 4.9 percent figure was actually too high because it ignored those on unemployment who were “scamming” the system. I was also told by members of the other party that the same figure is too low because it ignores “underemployment.”
Sorry. I know there are scammers. They show up for interviews and get their card stamped, but deliberately offend the hiring authority and get another week by showing that they were “looking.” Near the end of their eligibility they obtain employment which they keep long enough to have worked in two quarters and then be discharged for less than competent work. The number of these folks is not large but they do exist. They will take advantage of any system—the system just needs to figure them out.
Sorry. I do not buy the “underemployment” argument any more than I buy the “overqualified” argument in denying someone employment.
So we are dealing with the numbers BLS uses. But what, statistically, is the difference between 7.8 percent and 8.2 percent? In terms of who is work and who is not, you have to look at factors of economic activity as well. Are factory orders increasing? Is output increasing?
Does the American manufacturing sector show an increase or are these jobs based on the fluctuation of the retail system or the increase of freelance companies wherein the self employed have decided to go it without the capital base they need because there are no other options? And if so, how much of this is going to last? I had a discussion with my late father-in-law back in the late 80s about the surge of service sector jobs without an agricultural or manufacturing base to support them.
Right now, through the Quantitative Easing, the Fed is creating money without wealth. The created money will possibly create some employment in the financial sector—until the next bubble bursts. Without real wealth creation, reduction of unemployment is temporary at best.
To butcher a saying from Abraham Lincoln, “You cannot fool all the people all the time, but you can possibly fool a plurality through election day.”