10 Reasons Why Unemployment is in Serious Trouble

Blain Reinkensmeyer

Posted on Tue 14th Jul, 2009 03:05:50 PM

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Unemployment numbers are often skewed or mis-portrayed by mainstream media (much like all other economic data). The numbers are always revised after coming out and over the years how unemployment is measured is much different than what it once was in previous decades.

All in all the WSJ reported today that this is the only recession since the Great Depression to ever wipe out 100% of all job growth from the previous nine years. They also offered 10 reasons why we are in more trouble than what is currently shown as 9.5% unemployment (note: several points shortened for length):

1. June’s total assumed 185,000 people at work who probably were not. Thus, when the official numbers are adjusted over the next several months, June will look worse.
2. More companies are asking employees to take unpaid leave. These people don’t count on the unemployment roll.
3. No fewer than 1.4 million people wanted or were available for work in the last 12 months but were not counted. Why? Because they hadn’t searched for work in the four weeks preceding the survey.
4. 9 million workers or 5.8% of the workforce is now part-time which has doubled since the recession began.
5. The average work week for rank-and-file employees in the private sector, roughly 80% of the work force, slipped to 33 hours. That’s 48 minutes a week less than before the recession began, the lowest level since the government began tracking such data 45 years ago.
6. The average length of official unemployment increased to 24.5 weeks, the longest since government began tracking this data in 1948. The number of long-term unemployed (i.e., for 27 weeks or more) has now jumped to 4.4 million, an all-time high.
7. The average worker saw no wage gains in June, with average compensation running flat at $18.53 an hour.
8. The goods producing sector is losing the most jobs — 223,000 in the last report alone.
9. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers back to full time.
10. Job losses may last well into 2010 to hit an unemployment peak close to 11%. That unemployment rate may be sustained for an extended period.

The article goes on to discuss how the $787 billion stimulus package is most likely a bust and is definitely worth a read. If you want to see how the stimulus package is made up read our full Obama Stimulus Package breakdown post.

Source:
The Economy is Even Worse Than You Think
Mortimer Zuckerman
WSJ, July 14th, 2009
http://online.wsj.com/article/SB124753066246235811.html