The Employment Numbers Don't Tell the True Story
The problem with the US employment (and unemployment) numbers? They are misleading.
Sure, a person who knows what they are looking for can easily parse through the data provided by the Bureau of Labor Statistics (BLS) and find the "real" employment numbers.
However, Mr. and Mrs. Average, who accept the "official" employment numbers provided by the government at face value, are largely kept in the dark and don't have a real handle on the true employment picture in the country.
What am I talking about? Let's look at a few examples of how the employment numbers paint an inaccurate picture of what is truly going on in the country.
1. May employment numbers. Total nonfarm payroll employment grew by 431,000 jobs in May. Sounds strong, right? Sure, it sounds strong, but the real story is actually one of continued weakness in terms of national job growth. 411,000 of these jobs came from the TEMPORARY hiring of people to work on Census 2010. These are not stable, full-time jobs - these are temporary jobs. The real story is there were only 41,000 jobs added in the private sector in May. This weak number was one of the major reasons why the markets tanked on Friday. Take out the temporary jobs and job growth in the country was largely stagnant in May.
2. The "official" unemployment number. The "official" unemployment number in May was 9.7%. The average person would assume that this means that 9.7% of the people who want full-time work can't find it, but this is not the case.
The fact of the matter is that several key groups of people are excluded from the "official" unemployment number, including:
-marginally attached workers (people who want a full-time job and have looked for full-time work in the recent past, but have chosen to do something like upgrade their school or take care of their family while the job market improves)
-discouraged workers (a subset of marginally attached workers, these are people who want full-time work, have looked for full-time work but have given up on the idea of actually finding work anytime soon)
-people who want full-time work but have taken part-time jobs for *economic reasons*. For instance - a person with an engineering degree who wants a full-time job but has to accept part-time work to help pay the bills.. this person is NOT included in the official unemployment number that is provided by the government
If you added these three groups in with the "official" unemployment numbers, then you would be left with the U-6 unemployment rate (as compared to the U-3 rate, which is the "official" rate that is provided by the government). The U-6 unemployment number in May was 16.6%.
Should somebody who wants full-time work but has to work at McDonald's 15 hours a week to help pay his family's bills be excluded from the "official" unemployment rate? Should somebody who wants full-time work but has given up on finding a job due to a horrific job market be excluded from the "official" unemployment number?
Why can't the government provide numbers that are clear and easy to understand? Why is there such a disconnect between the "official" unemployment numbers and the U-4, U-5 and U-6 unemployment numbers? Why are some people portraying the May employment numbers as "strong" when this is clearly not the case?
I mean, we all know why the government massages the unemployment numbers. However, this doesn't make it right, and it falls on the people to educate themselves as to the true picture of the US job market.
Filed under: The Economic Meltdown