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    Unemployment Rate Up To 9%

    Unemployment Rate Up To 9%

    In a just released report by the Bureau of Labor Statistics, the unemployment rate increased from 8.8% to 9.0%.

    The “unemployment rate” can be somewhat misleading, as I have pointed out in the past, because as more people drop out of the labor market (i.e. give up even looking for work) the rate can drop.  So did the rate increase because more people were looking for work?

    According to the report, 244,000 non-farm payroll jobs were added.  But the report also notes that the “labor force also was little changed in April.”  So it does not appear that the increase was a result of more people looking for work.

    I’ll dig into the report and update on the details.

    Updates:  The “participation rate” was down 0.1% from March, so the increase does not appear to be caused by more people looking for work.  The number of people reentering the workforce or entering for the first time also was stable.

    The unemployment rate for Black males is 17.3%, and for Black females 12.8% (compared to 7.8% for White men and 6.6% for White women).  Black teenagers (16-19) have a 37.5% unemployment rate (compared to 20.7% for White teenagers).  The unemployment rate for Hispanic men is 10.3%, women 11.0% and teenagers 23.4%.

    In response to commenter Sandy, what some refer to as the “true” unemployment rate is much higher.  This table show statistics for “Alternative Measure of Labor Underutilization,” including a rate of 15.9% (seasonally adjusted, as is the 9.0% headline number) for “Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.”

    The New York Times, which is spinning this report as an indication that “the recovery continued to pick up steam,” makes this inaccurate assessment:

    “April’s numbers exceeded the forecasts of analysts, who had expected a gain of 185,000 jobs over all, with the change in private payrolls of 200,000. The uptick in the unemployment rate that came even as employers were adding jobs was an indication that more people were entering the work force as hopes for hiring increased.”

    Do NY Times reporters even read the reports about which they are writing?

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    1.) the 'true unemployment rate' counting everyone who is unemployed including those 'no longer looking for work' is usually 1.5x the listed rate or 2.5x the listed rate during recessions.

    2.) There is a ton of misinformation surrounding unemployment rates. The number is taken from state unemployment rolls. People who exhaust their unemployment compensation before finding a job become categorized as 'no longer seeking a job' when this may or may not actually be true.

    Also, even if you did fall off the official unemployment stat because you exhausted your compensation, you cannot simply 'decide' to start looking for work again and get back onto the official unemployment statistic. This had me shaking my head when the press started reporting that unemployment had risen simply because 'people have started seeking employment again'. Bogus! I would somehow need to get back onto the state unemployment rolls again (impossible) to be officially counted as 'unemployed'!

    The only thing that can increase the official unemployment statistic is actual, true lay-offs, so don't be fooled by the media. The only activity that can make the stat drop is for people to end their unemployment compensations for whatever reason, finding a job, or exhausting what they're entitled to.

    Professor, the headline in the Milwaukee Journal Sentinel, written by Jeannine Aversa, an AP Economics Writer, is "Economy added 244k jobs in April, 3rd straight month of solid hiring; rate ticked up to 9 pct."

    If the "Economy added 244k jobs in April, 3rd straight month of solid hiring", why are you all dooming and glooming? From the headline, I thought things were going swell. Just try to look at the bright side of things for once, ok? I'm sure you could find that article, and see that it is pretty upbeat. In fact, if we did a paragraph analysis and analyzed each paragraph as positive or negative, we would find the article is very positive. Which is why I check your blog regularly. Thanks.


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