Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

05 February 2010

The Real Unemployment Rate in January 2010

The announcement one hears on the jobs situation with the release of the new unemployment figures today is that while more jobs were lost in January, the unemployment rate improved from 10.0 to 9.7%.  This is based upon the game of seasonally adjusted rates and those seasonal adjustment factors may or may not be valid in the depths of long and deep recession.  There is surely room to play games with such figures and given that NOAA and NASA have played fast and loose games with the temperature records for political and ideological reasons, it is best to keep our guard up and consider the raw numbers.  So, let us look at those.

The table below gives the Bureau of Labor Statistics numbers in the Noninstitutional Civilian Working Age Population, the Employed, and the Officially Unemployed as released on 5 February 2010.  These are not seasonally adjusted numbers.  First, let us take note that though the Noninstitutional Civilian Working Age Population grew by 2,185,000 people from January 2009 to December 2009 and it grew from November 2009 to December 2009 according to the Bureau of Labor Statistics, this working age population decreased by 88,000 from December 2009 to January 2010.  This is very strange.  We must have had a lot of people go to jail or join the military in January!  Then I performed the calculations of the number of jobs which would be desired if the employment situation were as good as it was in January 1990 once again as I did in my posting of 13 January 2010 on the December unemployment figures.  The December number of employed has been adjusted upward since that time.

The raw unemployment rate in December 2009 was 9.65%, rather than the seasonally adjusted 1.0% rate officially used.  For course, this is based only upon those people known to the government to have been seeking work in December and does not include those who have given up or were seeking work through channels unknown to the government.  The evidence has been that the numbers of such people have been steadily increasing throughout the recession.  In comparison, the raw number unemployment % in January 2010 is 10.56%.  This is a far cry from the announced seasonally adjusted 9.7%!  According to these numbers, the number of employed Americans decreased by 1,144,000 people in January 2010 compared to December 2009.  There is not much for the federal government to boast about as a job creator here.
So, the government number of unemployed increased from December to January by 1,407,000 people to 16,147,000 people.  But, the situation is really much worse.  If the American people were as fully employed as they clearly wanted to be in January 2000, then we have a short-fall of 23,029,000 jobs!  As January 2000 shows, some people will be unemployed in the best of times.  Some because they lack the skills, some because they want work, but they do not want to work hard, and some because they are in-transit between jobs.  But, compared to the 4.04% unemployment of that time, the comparative unemployment in January 2010 is 14.41%, or 10.37% higher than then.  Of course this is also 3.57 times greater unemployment than then.

The numbers of long-term unemployed continued to increase.  There are also very large numbers of part-time employed people.  The average number of hours worked a week by non-farm private sector employees was up 0.1 hour from December to 33.9 hours.  The federal government hired 33,000 more employees in January, while the state and local governments had a small reduction in non-school employees.  Until the private sector starts hiring many more people, the unemployment reality will remain grim.


David said...

Thanks for the insights. It bolsters my contention that the Federal government fibs all the time by omission. I once worked for them in the 1960's and even then you couldn't discipline or fire the slugs. I had to continually do two jobs because one of my coworkers was a gross incompetent.

Will share your insights.

Old Scrappy

Charles R. Anderson, Ph.D. said...

Thanks for your comment.

Your comment was made while I was starting my continuous digging out job during our blizzard on 5 and 6 Feb 2010, soon followed by our third blizzard of the winter on 9 - 10 February. I have posted it just now, having failed to see it earlier. I apologize for discovering your comment so late.