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Fri Jun 5, 2020, 01:55 PM

Here's why the real unemployment rate may be higher than reported.

The unemployment rate fell to 13.3% in May, according to a Bureau of Labor Statistics report on Friday.
The agency admitted the real unemployment rate likely exceeds 16%.
That’s due an error in how furloughed workers were treated in the data sample. April’s unemployment rate would have been nearly 20% absent that same error. . .

The real unemployment rate is likely at least 16%, according to the federal government.

That would mean roughly 1 in 6 people can’t find work.'>>>

https://www.cnbc.com/2020/06/05/heres-why-the-real-unemployment-rate-may-be-higher-than-reported.html

7 replies, 880 views

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Reply Here's why the real unemployment rate may be higher than reported. (Original post)
elleng Jun 5 OP
Maeve Jun 5 #1
progree Jun 5 #4
Clash City Rocker Jun 5 #2
progree Jun 5 #3
Gothmog Jun 5 #5
rurallib Jun 5 #6
progree Jun 5 #7

Response to elleng (Original post)

Fri Jun 5, 2020, 01:59 PM

1. The stats really aren't enough when dealing with crazy times

Another quirk is people who told the agency that they were temporarily laid off because of the pandemic. The BLS classified many of these people “employed but absent from work due to other reasons.” Normally, this is a very small category, but several million people were classified this way. The BLS even put a special note to say the unemployment rate would be 16.3 percent, not 13.3 percent, if all these people classified as absent from work due to “other reasons” had been classified unemployed.
In the end, perhaps the best figure to look at to gauge the health of the labor market -- and how the economic rebound is going -- is what share of the adult U.S. population is employed. Economists call this the “employment-to-population ratio." (See the chart below). It plunged massively in April and has come back only slightly.

https://www.washingtonpost.com/wp-apps/imrs.php?src=&w=916

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Response to Maeve (Reply #1)

Fri Jun 5, 2020, 02:29 PM

4. It's also below any level seen since statistics on this measure began in 1948.

ETPR (Employment-To-Population Ratio) aka Employment Rate http://data.bls.gov/timeseries/LNS12300000

The lowest was around 55.0% at a couple points in the 50's and early 60's (vs. 52.8% now). The reason for the low numbers back in the 50's and 60's, most women were not employed from the standpoint of these statistics (they worked in the kitchen and other rooms in the house, but not for pay).

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Response to elleng (Original post)

Fri Jun 5, 2020, 02:09 PM

2. Former Chief Economist Heidi Schierholz has some good info on this

https://mobile.twitter.com/hshierholz?lang=en

Here’s a sample...

The official unemployment rate in May was 13.3%, a welcome improvement from April, but *aside* from April, still worse than anything we’ve seen since the Great Depression.

And, the unemployment rate is not reflecting all coronavirus-related job losses. In fact, only about two-thirds of people who remain out of work as a result of the virus are showing up as unemployed.

About 15% (4.9 million) of those out of work because of the virus are being misclassified—they have been furloughed and should be counted as unemployed and on temporary layoff, but are instead being counted as “employed but not at work.”

Roughly a fifth (6.6 million) of those out of work because of the virus are being counted as having dropped out of the labor force. This is because jobless people are only counted as unemployed if they are actively seeking work, which remains impossible for many.

If all the 32.5 million workers who are out of work as a result of the virus had shown up as unemployed, the unemployment rate would have been 19.7% in May instead of 13.3%.

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Response to elleng (Original post)

Fri Jun 5, 2020, 02:22 PM

3. The BLS too spells it out very clearly

https://www.bls.gov/news.release/empsit.nr0.htm

| In the household survey, individuals are classified as employed, unemployed, or not |
| in the labor force based on their answers to a series of questions about their |
| activities during the survey reference week (May 10th through May 16th). Workers who |
| indicate they were not working during the entire survey reference week and expect to |
| be recalled to their jobs should be classified as unemployed on temporary layoff. In |
| May, a large number of persons were classified as unemployed on temporary layoff. |
| |
| However, there was also a large number of workers who were classified as employed but |
| absent from work. As was the case in March and April, household survey interviewers |
| were instructed to classify employed persons absent from work due to coronavirus- |
| related business closures as unemployed on temporary layoff. However, it is apparent |
| that not all such workers were so classified. BLS and the Census Bureau are |
| investigating why this misclassification error continues to occur and are taking |
| additional steps to address the issue. |
| |
| If the workers who were recorded as employed but absent from work due to "other |
| reasons" (over and above the number absent for other reasons in a typical May) had |
| been classified as unemployed on temporary layoff, the overall unemployment rate |
| would have been about 3 percentage points higher than reported (on a not seasonally |
| adjusted basis)
. However, according to usual practice, the data from the household |
| survey are accepted as recorded. To maintain data integrity, no ad hoc actions are |
| taken to reclassify survey responses. |
| |
| More information is available at |
| www.bls.gov/cps/employment-situation-covid19-faq-may-2020.pdf.

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Response to elleng (Original post)

Fri Jun 5, 2020, 02:38 PM

5. Steve Rattner agrees

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Response to elleng (Original post)

Fri Jun 5, 2020, 03:28 PM

6. My understanding is that they do not use the U6 rate (discouraged workers)

that they used to beat Obama with. Last I looked for April the reported unemployment was 14.5%. The U6 was @ 22.5%. With the furloughed workers the rate bumped up to @ 25%.

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Response to rurallib (Reply #6)

Fri Jun 5, 2020, 05:49 PM

7. U-6 unemployment rate

U-6 unemployment rate was 21.2% in May, according to this morning's report (includes people who have looked for work sometime in past 12 months and part-time workers who say that want full-time work)

https://data.bls.gov/timeseries/LNS13327709

As you say, add another 3 percentage points for the miscategorized workers.

U-6 was 6.7% at its low point in December.

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