"Jobs Saved, or Created"-->Bunch of Total BS! 17.5 % Unemployment!!

The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed

Published: Thursday, 19 Nov 2009 | 4:55 PM ET
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By: Jeff Cox

As experts debate the potential speed of the US recovery, one figure looms large but is often overlooked: nearly 1 in 5 Americans is either out of work or under-employed.


According to the government's broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994.

The number dwarfs the statistic most people pay attention to—the U-3 rate—which most recently showed unemployment at 10.2 percent for October, the highest it has been since June 1983.

The difference is that what is traditionally referred to as the "unemployment rate" only measures those out of work who are still looking for jobs. Discouraged workers who have quit trying to find a job, as well as those working part-time but looking for full-time work or who are otherwise underemployed, count in the U-6 rate.

With such a large portion of Americans experiencing employment struggles, economists worry that an extended period of slow or flat growth lies ahead.

"To me there's no easy solution here," says Michael Pento, chief economist at Delta Global Advisors. "Unless you create another bubble in which the economy can create jobs, then you're not going to have growth. That's the sad truth."

Jeff Cox
Staff Writer

Pento warns that forecasts of a double-dip ("W") or a straight up ("V") recovery both could be too optimistic given the jobs situation.

Instead, he believes the economy could flatline (or "L") for an extended period as small businesses struggle to grow and consequently rehire the workers that have been furloughed as the U-3 unemployment rate has doubled since March 2008.

As that trend has happened, the U-6 rate has expanded at an even more dramatic pace. Economists cite several reasons for the phenomenon.

For one, more workers are becoming discouraged as real estate—the focal point for the expansion in the earlier part of the decade—has collapsed and taken millions of directly related and ancillary jobs with it.

Winterizing Your Portfolio - A CNBC Special Report

Many workers believe those jobs aren't coming back, and have thus quit looking and added themselves to the broader unemployment count.

"In the earlier part of this decade, 40 percent of all new jobs created were in real estate. Attorneys, mortgage brokers, agents, construction—they were all circled around housing," Pento says. "We've had a jobless recovery in the last two recessions. This is going to be the third jobless recovery in a row."

Another factor that may be leading people onto the rolls of those no longer looking for jobs is the government's accommodative extensions of jobless benefits.

"Workers are unemployed for a much longer span than we've seen historically," says David Resler, chief economist at Nomura Securities International in New York. "Part of that may be affected by the longer availability of benefits. It reduces the incentives for an urgent job search."

The U-6 rate debuted in January of 1994 at 11.8 percent, while the U-3 was at 6.6 percent. The measure hit a low of 6.9 percent in April 2000 while U-3 sat at 3.8 percent.

While the current methodology only dates back 15 years, a former U-6 gauge was in existence previously and peaked at 14.3 percent in 1982. Economists predict the current measure would fall just below that number using the same methodology.

"We're in the process of discovering how severe this recession and the long-run impact on certain industries will be and what that will do to overall employment," Resler says. The U-6 rate "portends a very slow, sluggish recovery."

If that holds and the US economy stays weak, that presents challenges for investors.

"People focus too much on that 10 percent number and not on the larger number," says Kevin Mahn, chief investment officer at Hennion & Walsh in Parsippany, N.J. "There's a humongous inventory of people out there looking for work and have been looking for work for a long time. Where are those jobs going to come from?"


Current DateTime: 09:19:17 23 Nov 2009
LinksList Documentid: 34041738

* The Worst Jobs in America
* Recovery or Not? Pros Disagree
* 'Jobs Saved' Count to Change
* Avoiding Job Search Burnout
* Jobless Recovery Game Plan

High unemployment and the resulting pressure on consumers is driving many investors to look for opportunities overseas and in other assets.

Walsh says that trend is going to continue, with clients going to foreign markets, real estate investment trusts, certain bonds—anywhere that can offer profits above the slow-growth mire of US-based investments.

"If full employment is 4 percent, people are wondering how we're going to get from 10 (percent) to 4. Well, try getting from 17 to 4. We may not get back to full employment for a decade," Mahn says. "As an investor, that causes me to look for different places now. Maybe you can't just put money in US large caps and ride out this recovery."

* Slideshow: Where the Jobs Are

© 2009 CNBC.com

Well, all I can say is: "How's that Hope and Change'" working for all of us now??

No votes yet

Hello, my name is Kevin. How may I help you today?


hmm I wonder who is on that invitation list for the State Dinner honoring the Indian PM...

Unemployment is "overlooked"? What country does this guy live in? The stimulus was far too small.

Pink Slip

Underemployment is no longer an issue, since it's now normal. As more and more manufacturing flees the nation, we're left with a massive deficit of "worthwhile" jobs. So you will have to settle for service jobs that either require few skills, or form careers with little expectation of advancement in any dimension (leadership or skill). Naturally, if you expect to survive under such an economy, you'll have to reduce your standard of living.

True, people have tried to make up for all that by insisting on the government mandating that their silly niche product or service be used in a mandatory fashion by the population. But that can only go so far, and when it comes to using government to force people to use companies, large corporations tend to win out in that game.

There are still jobs for people with the right educations - IT, nursing, pharmacy, accounting…

I love when Geitner speaks. That way I know how many jobs we've saved and/or created. Other than that there's been no way to know.


Hiring Geitner was a signal to Wall St that we will continue to use the power of government to protect the Masters of the Universe at the expense of Main St.

The banks own us.

Pink Slip

Soros owns you....

Who hired geitner?..Oh...bama...

Guess who the new guy is who Oduma is gonna hire for the job...

The CEO of JP morgan chase....

Hope and change!

“Political correctness is a doctrine, fostered by a delusional, illogical minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.”

But wait, you didn't want "change"---did you?

Pink Slip

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