Unemployment Situation is Far Worse Than You May Think
Most people know that the jobless rate in the United States is currently 9.5%, based on the most recently released numbers from June.
What people may not realize is that the government massages the numbers to make them look better than they actually are.
Don't believe me? Read up on the difference between the U-3 unemployment rate (which is the "official" unemployment number) and the U-6 unemployment rate (which is a broader measure of unemployment in the United States).
Just how bad is the current unemployment situation in the United States?
Well, according to the Center for Labor Market Studies, there were 29.37 million "underutilized" workers in the United States as of May 2009.
What exactly does underutilized mean?
It can mean someone who is currently unemployed but is actively seeking full-time work.
It can mean someone who has been unemployed for some time, and has given up on the hopes of finding any work.
It can mean someone who wants full-time work but has to take on a part-time job just to survive.
These are all "underutilized" workers.
And, according to the Center for Labor Market Studies, there were 29.37 million of these people in May of 2009. This is the largest number EVER.
This means that roughly 18% (18.2% to be exact) of all of the people in the United States that wanted full-time work in May weren't able to find it.
That's a pretty shocking number, and is pretty close to the official U-6 unemployment number for May that was released by the government.
Why is this information important?
Well, if you want a meaningful rebound in the economy, a sustained upswing in the housing market or a prolonged bull market in equities, then unemployment numbers are going to have to drop, and significantly.
Any talk of "green shoots" is completely useless if people aren't getting back to work.
If people aren't working, then they aren't consuming.
If people aren't working, then they certainly aren't looking to buy new homes or condos.
If people aren't working, then there are less tax revenues and more cutbacks.
This recession is going to continue unless a substantial portion of these 30 million people are able to find full-time employment.
The question then becomes - which industries are going to employ these millions of "underutilized" workers going forward?
Source: NYT - No Recovery in Sight
Filed under: The Economic Meltdown