Why the True Unemployment Rate is More Than Twice as Bad as 10.2%

The official U.S. unemployment rate hit 10.2% in October, the highest since the recession of 1983. But bad as that is, at least we are nowhere near the unemployment levels of the Great Depression, right?


That official 10.2% figure really doesn’t tell the truth about unemployment in America. The real unemployment figure is more than twice the official 10.2% rate–a lot higher than you know, even if you already know about some of the number-jumbling that is normal in “official” government statistics. The bad news, and the full facts, paint a bleak picture of the months ahead.

The official unemployment number doesn’t include people who have given up looking for a new job because of months of not being able to find one.  It also doesn’t include people who have taken a part-time job just to survive in the short-term, but whose long-term survival requires them to find full-time employment.

What this means is that if you were a highly paid software engineer with Master’s degree whose company went belly-up a few months ago–and you are now working nights at a gas station to put food on the table–you don’t count in the official unemployment rate of 10.2%.  You have a job.  It doesn’t matter that you are now making a fraction of what you used to make in what you consider to be a temporary, fill-in job. It doesn’t matter that you are still sending out resumes and trying to land interviews. It doesn’t matter that you have lost, or are going to lose, your house. You don’t count.

That isn’t all. You also don’t count if you found yourself laid-off in a company down-sizing back at the beginning of the summer, and after four or five months of getting turned down for job after job you have given up looking for a job because you are discouraged. The same is true if you have taken a break from job-hunting until the economy improves, or in hopes that your former employer will re-hire you as things get better.  If you weren’t actively looking for a job in October, then you aren’t officially unemployed.  You don’t count. You are in political Limbo.

The official adjusted unemployment rate, when you add in all of the people who are a.) still out of a job but have given up looking for a new one, and b.) used to have full-time jobs but have had to take a part-time job to try to make ends meet, is 17.5%.

17.5%. Not 10.2%.

This method of trimming huge numbers of people out of the official unemployment numbers is fairly recent. It started in 1993 during the Clinton administration. And so, while we can say conclusively that the Obama administration has produced the highest unemployment toll since 1993, we can’t easily compare these numbers to the recession of 1983, or unemployment during the Great Depression.

But we can look at the official data available under different headings, even things up as much as possible, and get an idea of how bad things really are right now–and how bad they are likely to become. And the picture is not a rosy one.

Looked at that way, U.S. unemployment during the Great Depression (or the First Great Depression, as historians are likely to call it after the next few years), hit a record high of 24.6%. It took four years for it to reach that level after the stock market crash of 1929. One year after the Crash of ’29, American unemployment was 8.5%. Two years after the Crash, in 1931 it hit 15.9%. The following year, in 1932, it bottomed out at 24.6%.

One year after the beginning of our current “economic crisis,” the comparable U.S. unemployment rate is already higher than unemployment was in 1931. How bad will our unemployment be this time next year? Two years from now?

Unemployment remained high in America throughout the 1930s, and only dipped below 15% when World War II began. By 1942, unemployment had plummeted to 4.7% because of our mobilization for the war.

You might remember that Democrats were in charge back then, too.

Remember those recent warnings from the Obama administration that unemployment was going to remain high for the next several years? They are basing that on history as much as on economic projections. The last time this happened, high unemployment lasted for 12 years. And it took a global war to bring it down to pre-Depression levels.

17.5% real unemployment today versus 24.6% unemployment at the depth of the Great Depression of the 1930s.  Well, at least it isn’t worse.

Or is it?

The problem is that 17.5% isn’t the actual, current unemployment rate either.  Things are really worse than that already.

If you lost your job more than a year ago, and have given up looking for a new one until the economy improves or out of frustration, you aren’t counted at all in any of the government’s official statistics.  For all practical purposes, you have simply ceased to exist as far as the government is concerned.  Retirement-age people–even those who have to work to supplement their incomes–aren’t counted either.  Neither are the disabled who are able to work but have lost their jobs.

John Williams, of American Business Analytics and Research, an economist who runs the Shadow Government Statistics website, estimates that when you add in the people who are no longer officially counted anywhere but have lost their jobs…the October, 2009, most accurate figure for the October, 2009, American unemployment rate is 21.4%.

21.4%. More than one out of every five people in the United States is unemployed.

And that is just the national, averaged rate. In some parts of the country, such as Michigan, the rate is much higher already. Just as it was during the Great Depression, where cities such as Detroit, Cleveland, Toledo and many others had unemployment rates of 50% or more–some up to 90% unemployed.

Remember that “change” that President Obama and the Democrats promised in last year’s election campaign?  Remember the jokes and bumper stickers about how the only change that voters would actually have would be the change jingling in their pockets?

Well, for one out of every five Americans who used to be working…even pocket change is hard to come by these days.

The sky-high unemployment rate getting worse every month from the deficit-busting policies of President Obama and the Democrat-controlled Congress is going to be the Grinch that steals Christmas this year. Spending is going to be down.  Malls are going to remain Ghost Towns.  Retailers that have held on hoping for a Christmas miracle are going to cut back or close completely early next year.

And then things are going to get worse.  Much worse.