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Time To Focus On the Real Unemployment Rate

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Forget the official 8.2% unemployment rate. Take a hard look instead at what’s known as the U6 rate, which tracks not only those out of work but those who’ve essentially given up looking for work.

That rate stands at about 14.5%, or nearly double the official unemployment rate.

As economists digest the disappointing job numbers released Friday -- just 120,000 jobs added in March, well below expectations -- some say the U6 figure is the data point people should be focused on.

The official figure used by the Labor Department “leaves out a lot of people who’ve just given up,” said Aparna Mathur, a resident scholar and economist at the American Enterprise Institute.

The U6 number is derived from a household survey that includes people who are actually unemployed as well as those who haven’t looked for work in over four weeks, Mathur explained.

“If you’re unemployed and you haven’t been looking for work in the previous four weeks than you’re not considered part of the official unemployed,” she said. The U6 rate, meanwhile, “includes all of those people who are too discouraged to look for work.”

The 120,000 jobs added in March was the smallest increase since October and effectively killed momentum that had been growing in the labor markets since late last year. Forecasts had predicted nonfarm unemployment to rise by 203,000. The economy had added more than 200,000 jobs in each of the past two months.

The slowdown in employment growth last month likely reflected the fading boost from unseasonably warm winter weather.

Despite the falloff in March, the unemployment rate fell to 8.2% from 8.3%.

Analysts said the drop in the unemployment rate is directly tied to Americans who have given up looking for work and are no longer counted in the official unemployment figures.

One of the biggest obstacles to an economic recovery has been solving the problem of the long-term unemployed. According to a recent report from RBC Global Asset Management, the ranks of the long-term unemployed, or those out of work for 27 weeks or more, have soared to 7 million, up from 1 million in 2007 ahead of the onset of the financial crisis.

Mathur said about 43% of the 12.8 million Americans officially labeled out of work fall into the category of the long-term unemployed, “which is huge, we’ve never seen those kinds of numbers in any recession,” she said.

That problem is reflected in the U6 rate.

Mathur said the gap between the official rate and the U6 rate is usually about two percentage points. But in the wake of the financial crisis that followed the collapse of the U.S. housing market in 2007, the gap has widened to about seven points.

“Usually the difference is pretty low so it’s not something people have really focused on because there’s hasn’t been that big of a gap,” she said. “The tremendous difference in this recession has been the long-term unemployed. The labor market hasn’t really recovered at all."

Read more: http://www.foxbusiness.com/economy/2012/04/06/time-to-focus-on-real-unemployment-rate/#ixzz1rJDvKLjy

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Filed: AOS (apr) Country: Philippines
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In addition, the conventional unemployment rate understates current labor market distress and misses the huge growth in underemployment(involuntary part-time work).


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Filed: Country: England
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How do you "focus" on someone who doesn't want to work?

You incentivize unemployment benefit, so that after a short time it becomes increasingly more attractive to the unemployed to do something, rather than sitting it out for nigh on 2 years, surviving on government handouts alone.


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Cut unemployment and this problem will handle itself overnight.


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How do you "focus" on someone who doesn't want to work?

first, you must work for acorn...


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Filed: Country: United Kingdom
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You incentivize unemployment benefit, so that after a short time it becomes increasingly more attractive to the unemployed to do something, rather than sitting it out for nigh on 2 years, surviving on government handouts alone.

People surviving on unemployment benefits are included in the official unemployment rate.


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People aren't "surviving" on unemployment benefits. They're thriving.

Anyone that gets paid to do nothing is successful.

We are the suckers paying for that.


Русский форум член.

Ensure your beneficiary makes and brings with them to the States a copy of the DS-3025 (vaccination form)

If the government is going to force me to exercise my "right" to health care, then they better start requiring people to exercise their Right to Bear Arms. - "Where's my public option rifle?"

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People aren't "surviving" on unemployment benefits. They're thriving.

Anyone that gets paid to do nothing is successful.

We are the suckers paying for that.

You don't get it. If they get unemployment benefits, they are counted in the official unemployment statistics.

If they have "given up looking for work", they no longer qualify.


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You don't get it. If they get unemployment benefits, they are counted in the official unemployment statistics.

If they have "given up looking for work", they no longer qualify.

You're right, I don't get it. I don't get why we allow our government to play a shell game on TV and we keep paying for it.

Meanwhile, millions of lazy @$$ people sit at home watching TV and we keep paying them to do so. In the very near future that scale is going to tip over and we'll no longer be able to do so since more people will be receiving free money than paying into the free money collection system.

It's third grade math and I'm appalled people refuse to see it for what it is.


Русский форум член.

Ensure your beneficiary makes and brings with them to the States a copy of the DS-3025 (vaccination form)

If the government is going to force me to exercise my "right" to health care, then they better start requiring people to exercise their Right to Bear Arms. - "Where's my public option rifle?"

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Filed: Other Country: Afghanistan
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You're right, I don't get it. I don't get why we allow our government to play a shell game on TV and we keep paying for it.

Meanwhile, millions of lazy @$$ people sit at home watching TV and we keep paying them to do so. In the very near future that scale is going to tip over and we'll no longer be able to do so since more people will be receiving free money than paying into the free money collection system.

It's third grade math and I'm appalled people refuse to see it for what it is.

I'd like to see stats on where they go when they fall off unemployment. I'm thinking the two primary directions people go are either retirement (this would be logical for a baby boomer) or school.

On one hand statiticians have been predicting for years that the participation rates would drop as the baby boomers age. The oldest are in their late 60s and the youngest are in the early 50s. Markets have recovered mostly, so unless you were caught up in a housing related issue they may just be retiring. For instance my parents are retired as of last year.

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I'd like to see stats on where they go when they fall off unemployment. I'm thinking the two primary directions people go are either retirement (this would be logical for a baby boomer) or school.

On one hand statiticians have been predicting for years that the participation rates would drop as the baby boomers age. The oldest are in their late 60s and the youngest are in the early 50s. Markets have recovered mostly, so unless you were caught up in a housing related issue they may just be retiring. For instance my parents are retired as of last year.

But yet we're led to believe we need to keep paying people for two years or else they'll go under.

I have more faith in Americans than that. I don't think they'll go under if we stop paying them. I think they'll figure out a way to survive.


Русский форум член.

Ensure your beneficiary makes and brings with them to the States a copy of the DS-3025 (vaccination form)

If the government is going to force me to exercise my "right" to health care, then they better start requiring people to exercise their Right to Bear Arms. - "Where's my public option rifle?"

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But yet we're led to believe we need to keep paying people for two years or else they'll go under.

I have more faith in Americans than that. I don't think they'll go under if we stop paying them. I think they'll figure out a way to survive.

I think its been scaled back some, and probably will return to normal in January.

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Filed: Country: United Kingdom
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I'd like to see stats on where they go when they fall off unemployment. I'm thinking the two primary directions people go are either retirement (this would be logical for a baby boomer) or school.

Or just mooching off others. Think married couples where both spouses used to work, or 30-year-olds living in their parents' basements.

Technically not a drain on the welfare system, but not exactly contributing members of society either.

Edited by mawilson

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The Feds need to give bigger tax breaks to the businesses so they can hire even more illegal labor.


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