Unemployment Officially At 10% ... But It's Really 21.9%

It’s that time again. This morning, the Department of Labor released the official statistics for U.S. unemployment last month. And just as the Obama administration promised, things are getting better. Right?


Optimists were looking for the first signs of net job creation last month since 2007. At worst, they were hoping for the jobless rate to hold steady at 10.0%. And the worst is what is what they got.

The official unemployment rate for December remained unchanged at 10.0% at a time when the Obama administration really, really could have used some good news to offset all the bad news and screw-ups lately. No progress on the job front. Zip. The streak of monthly job losses is extended one more month to now total 24, with no sign things are getting better. And the only public event on the President’s calendar today is an afternoon statement to the press on joblessness.

It will be interesting to see if he again says, “the buck stops here.” For all too many Americans, the buck is stopping before it gets into their hands to pay the bills, buy food and pay for other necessities.

But before the spin hits the fan, here’s the really bleak news that you won’t hear the President talking about this afternoon. The real unemployment rate–the rate as it used to be calculated before the Clinton administration decided in 1994 that it all depended on what “unemployed” meant, actually crept upwards in December.

The more accurate unemployment rate, also released this morning by the Department of Labor, rose from 17.2% in November to 17.3% in December. And that is at a time when seasonal, temporary jobs for the holidays should have taken a lot of people off the unemployment rolls at least temporarily.

As I’ve reported before, the “official” unemployment rate bears about as much relationship to the true number of people who are unemployed in America as the Climate Research Unit’s fraudulent “global warming” data bears to the real average temperature people have been experiencing the last ten years. The unemployment numbers given out by the government are less than 50% of the actual number of people who are unemployed in this country.

A picture is worth a thousand words, so here’s a chart, courtesy of John Williams, of American Business Analytics and Research and Shadowstats.com and reproduced with his permission, that shows how bad unemployment in the land of Hope and Change® really is:

Chart of U.S. Unemployment

The lowest, red line on the chart is the official number the administration and the mainstream media will be talking about today. It is called the U3 rate. The middle, gray line is also an official government number–but one that President Obama, Nancy Pelosi and Harry Reid would just as soon you never knew about. That is the U6 rate. First, let me explain the difference between these two official government figures and why nearly everything you hear today on the news about unemployment is basically going to be a lie. I’ll talk about the highest, blue line afterward.

The 10.0% official unemployment number the media will be talking about for the next few days doesn’t include a lot of people who are actually unemployed, but who are not counted in the official government numbers for one reason or another. In fact, it is truly amazing who isn’t counted officially as unemployed–amazing, and somewhat frightening.

1. If lost your job sometime last year, have looked unsuccessfully for a new job for several weeks or months, and have given up looking because you are discouraged or realize that there simply aren’t any jobs available for you right now…then you and your lost job do not count.

2. If you were self-employed and can no longer make money as a self-employed worker but can’t find a job working for someone else–and that would include small business owners who went bankrupt–then you and your lost job do not count.

3. If you took early retirement, and lost the full or part-time job you took after retirement in order to have enough money to make ends meet, then you and your lost job do not count.

4. If you are disabled, and lost the full or part-time job and the extra money you used to have that made it possible to live on your disability pension, then you and your lost job do not count.

5. Perhaps you are the spouse of a full or part-time worker, and you are also the primary homemaker or family childcare provider for the family. If the only way your family was surviving before was through a full or part-time job you used to have but lost, and you can’t find any kind of job now, then you and the job you lost do not count. The government considers you fully employed as a homemaker.

6. Let’s say that you used to have a high-paying job working in IT, or marketing, or banking, or real estate, or finance, or whatever, and after losing that high-paying job you could not find another job at a comparable salary. So, after weeks or months of being out of work, you took a job at Wal-mart, or McDonalds or the local gas station at minimum wage…well congratulations! The government considers you to be fully employed and, you guessed it, you and the job you lost do not count on the “official” unemployment numbers you’ll hear about today.

Add all of these “do not count” categories of people who are truly unemployed or painfully underemployed to the official number shown in that bottom red line on the chart above and you get the light gray line in the middle. The red line representing the U3 rate eliminates a lot of people who certainly consider themselves to be unemployed–you may even be one of them. The gray line U6 line includes those people listed above, and that is why it is far more accurate as a gauge of joblessness. As I said, both those figures are official government statistics, and come directly from the Department of Labor…but you have to hunt a bit and know what you are looking for to find the U6 rate on their website.

You will notice that the difference between the red line and the gray line has gotten much bigger in 2009, showing a lot more people chronically out of work. Notice also that the difference between the two lines was pretty much the same all through the presidencies of both Bill Clinton and George Bush. Do not believe for a moment that things have not been getting steadily worse under Barack Obama. This is not even primarily a Democrat-Republican problem. It is specifically an Obama-Pelosi-Reid problem.

The current U6 (gray line) unemployment rate is actually 17.3%. That is the second highest it has been so far in recent times; the only time it has been higher lately was in October of 2009, when it was 17.4%. So when was the last real unemployment in our country was this high?

Frankly, we don’t exactly know. In order to find unemployment in excess of 17%, you have to go back to before we kept the sort of unemployment statistics we keep today.

The United States has not seen unemployment rates this high since the 1930’s, and it took more than two years after the Crash of 1929 for things to get that bad. At the height (or depth) of the Great Depression, U.S. unemployment was 24.6%, and with the waves of foreclosures and other real estate problems due to hit this spring and summer, it is possible it will get that bad again. Especially with the Democrats in charge and spending like…Democrats.

Now, what about that top, blue line on the chart?

Frankly, that is probably the most accurate measure of true unemployment that we currently have. In 1994, when the U6 and U3 unemployment rates were split apart to change the way unemployment was calculated, another trick was thrown in to make the difference between the two new rates less than what it actually is. Remember up above when I listed the ways that you “did not count” on the official, U3 rate? The first way was if you had lost your job within the last year and had gotten discouraged trying to find a new one. And that is where the top, red line comes in.

What if you lost your job in December of 2008? Or in August of 2008? Or anytime prior to exactly 12 months ago?

If that is the case, and you have been waiting for the job market to improve before you start applying for work again–then you really don’t count as far as the government is concerned. In fact, for all practical purposes, you do not exist.

The largest number of “off the books” unemployed-but-not-counted-as-unemployed people are those who are “discouraged workers.” And if you have been discouraged for more than a year, it is likely that you are going to join the ranks of the permanently un- or under-employed. So you vanish from the books completely and are no longer a troubling statistic that has to be talked about at press conferences.

The red line at the top of the chart adds back in an estimate, based on calculations by economist John Williams, of workers who are unemployed or underemployed, and have been so for more than one year. This is the figure that is closest to the “unemployment rate” that would have been reported by the news media in all the years prior to 1994 going back to the 1940s. And that “real” unemployment rate is 21.9%.

21.9% unemployment. Now. In Barack Obama’s America.

The only Hope here is the hope that things won’t get as bad as they seem likely to get. I don’t think that this is the Change that people were expecting either when they voted for him. It is however, the change that we are getting. And it will get worse for some months, or possibly years, to come.

Remember that the comparable unemployment rate during the Great Depression topped out at 24.6%, only about 3 percentage points higher than where we are now. In fairness, because of the great number of people who lived or worked on farms during the 1930s compared with the small number who do so now–and the greater assistance programs available now for the unemployed–the “real” unemployment rate would probably have to reach about 34% to bring an equal amount of misery to people now as the Great Depression brought back then. But I think most of us feel that what we have now is misery enough.

About one out of every five Americans who would like to be working and is able to work cannot find a job, and if this trend continues it will soon be one out of every four. And that is just an average, nationwide rate. In some places in the upper Midwest Rust Belt, real unemployment has already exceeded 30%. And that still isn’t the end of the bad news.

Another ticking time bomb on how bad U.S. unemployment really is will explode in the next few weeks when the Bureau of Labor Statistics revises the unemployment data it released last year to “correct” it. They have already admitted,as reported by Bloomberg, that they over-estimated the number of jobs created in early 2009 by at least 824,000. John Silva, chief economist at Wells Fargo Securities, says that they continue to underestimate job losses and overestimate job creation by about 15% per month. The final correction may add over 1,000,000 additional job losses to the 2009 unemployment figure, and push the lowest, U3 unemployment rate up about a half percentage point.

In the meantime, the Democrat majority controlling the House of Representatives, the Democrat super-majority controlling the Senate, and President Barack Obama keep adding more and more budget-busters to bills being decided in secret in smoke-free back rooms far away from cameras, news media and the scrutiny of the general public. They are buying votes with promises of money that they–or rather we, the American people–do not have. They keep planning new taxes to bleed cash from a dwindling tax base of those who still have jobs, instead of focusing on really fixing the economic problems that we face. They expect more and more revenue from people who have less and less each day. And overseas, the nations who hold our national debt are getting more nervous every day.

No economist who is not on the government payroll thinks that we are really at the end of this economic crisis. Most believe that the second, and deeper, dip of a double-dip economic crash is due to come this year. Let there be only one successful major terrorist attack on a domestic civilian target, or the heating up of another front in the war on terror–Iran and Israel, for example, or a devastating natural disaster like a major earthquake and our “recovery” will collapse overnight with no money left for another non-stimulating stimulus program.

One thing you can definitely count on is that, just like back in the 1930s when Democrats were also in charge of the government and did everything wrong, things are going to get worse before they get better. Much, much worse.