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Unemployment rise only 4 percent, not 9.5 percent

ricksfolly

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The unemployment base rate in 2008, was 5.5 percent and now it's 9.5 percent, but the media refuses to admit the rise is really only 4 percent.

Is it because they can't count, or is it because bad news sells better?

The number of US employed in 2008 was 145.3 million. 4 percent less in 2010 brings the number of those who still pay their income and SS taxes down to around 139 million.

When you use facts, not fuzzy math, the situation isn't nearly as bad.

ricksfolly
 

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Villiage Idiot
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Bad news sells better.

But the REAL unemployment rate is actually much higher. Just a few years ago the average workweek was well over 40 hours a week. The last I saw it was something around 35 hours. We have an additional 20%-25% unemployment just from hours being cut back. Factor that in plus the number of people who have decided to stop looking for work or to retire early because finding a job is hard, the true unemployment rate is certainly far over 9.5 percent, possibly close to 35%.

I have come to the conclusion that we shouldn't be looking at the unemployment rate at all. We should be looking at the percent of people who are working - in other words, the state of our economy is much better evaluated by the total employment rate (including all citizens regardless of age or situation). If we used the total employment rate as a benchmark, it would be much easier to project the coming possible disaster created by the baby boomers retiring and living extremely long lives. We possibly won't have enough people working to produce enough for all of us to continue to see the improvements in living standards that we saw during the 20th century. Of course improved productivity due to technology is the one possible mitigating factor to this potential disaster.
 

ricksfolly

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Bad news sells better.

I have come to the conclusion that we shouldn't be looking at the unemployment rate at all. We should be looking at the percent of people who are working - e mitigating factor to this potential disaster.
My data comes from the Bureau of Labor statistics, the same place the 9.5 percent comes from, so all the other sources aren't official.

ricksfolly
 

donsutherland1

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One should not play down the impact of the present unemployment situation. While the increase might be more manageable if it were a temporary situation, the problem is that there is likely a significant structural component to the increase in the unemployment rate. In other words, even as the economy experiences a cyclical rebound, the unemployment rate is not likely to return to the pre-recession levels anytime soon.

A comparison of the June 2010 and September 2007 (end of the last quarter before the start of the recession):

Unemployed for 27 weeks or longer: 45.5% vs 17.6% of the unemployed
Median duration of unemployment: 25.5 weeks vs. 9.0 weeks
Mean duration of unemployment: 35.2 weeks vs. 16.5%

Number of employed persons: 139.119 million vs. 146.193 million
Number of unemployed persons: 14.623 million vs. 7.200 million
Unemployment rate: 9.5% vs. 4.7%
U-6 (broadest measure of unemployment: 16.5% vs. 8.4%

Months at or above 9%:
1973-75 recession: 1
1980 recession: 0
1981-82 recession: 19
1990-91 recession: 0
2001 recession: 0
2007-2009 (?) recession: 14 (and counting)

Even as the number of unemployed persons and the unemployment rate doubled, select measures concerning to duration of unemployment (% of those unemployed for 27 weeks or longer and mean duration of unemployment) nearly tripled. That disparity hints at a structural component to unemployment. Given that structural unemployment results from a skills-job openings mismatch, there is no rapid remedy for addressing such unemployment. Hence, unemployment rate will likely remain sticky on the high side. That will likely induce some of the long-term unemployed to leave the labor force. In turn, that development will have an impact on Social Security (early retirement for some who might have stayed in the workforce longer), Medicaid/Various other social welfare programs (those who suffer a permanent and significant decline in income that makes them eligible for those programs).
 

Ahlevah

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I have come to the conclusion that we shouldn't be looking at the unemployment rate at all. We should be looking at the percent of people who are working - in other words, the state of our economy is much better evaluated by the total employment rate (including all citizens regardless of age or situation). If we used the total employment rate as a benchmark, it would be much easier to project the coming possible disaster created by the baby boomers retiring and living extremely long lives.
In the end, what really matters is how much bacon comes home. So we should also look at how much workers are earning. Not only are workers working less, they're getting paid less. The decade from 1998 to 2008 was the first since the Census Bureau began tracking income in which earnings declined. In 1998, real median income (in 2008 dollars) in the United States was $51,295. In 2008, real median income was $50,303 (http://www.census.gov/prod/2009pubs/p60-236.pdf).
 

ricksfolly

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One should not play down the impact of the present unemployment situation. While the increase might be more manageable if it were a temporary situation, the problem is that there is likely a significant structural component to the increase in the unemployment rate. In other words, even as the economy experiences a cyclical rebound, the unemployment rate is not likely to return to the pre-recession levels anytime soon.

A comparison of the June 2010 and September 2007 (end of the last quarter before the start of the recession):

Unemployed for 27 weeks or longer: 45.5% vs 17.6% of the unemployed
Median duration of unemployment: 25.5 weeks vs. 9.0 weeks
Mean duration of unemployment: 35.2 weeks vs. 16.5%

Number of employed persons: 139.119 million vs. 146.193 million
Number of unemployed persons: 14.623 million vs. 7.200 million
Unemployment rate: 9.5% vs. 4.7%
U-6 (broadest measure of unemployment: 16.5% vs. 8.4%

Months at or above 9%:
1973-75 recession: 1
1980 recession: 0
1981-82 recession: 19
1990-91 recession: 0
2001 recession: 0
2007-2009 (?) recession: 14 (and counting)

Even as the number of unemployed persons and the unemployment rate doubled, select measures concerning to duration of unemployment (% of those unemployed for 27 weeks or longer and mean duration of unemployment) nearly tripled. That disparity hints at a structural component to unemployment. Given that structural unemployment results from a skills-job openings mismatch, there is no rapid remedy for addressing such unemployment. Hence, unemployment rate will likely remain sticky on the high side. That will likely induce some of the long-term unemployed to leave the labor force. In turn, that development will have an impact on Social Security (early retirement for some who might have stayed in the workforce longer), Medicaid/Various other social welfare programs (those who suffer a permanent and significant decline in income that makes them eligible for those programs).
Digging even deeper into the bureau of labor statistics, I found a potential that would turn the whole unemployment picture upside down. Did you know that in 2008 74.5 million, 16 to 55 and older, weren't even looking for work, for one reason or another, and if just ten percent suddenly changed their minds, 7.4 million more souls knocking on doors or hitting the streets could be a real back breaker.

ricksfolly
 

Ahlevah

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Digging even deeper into the bureau of labor statistics, I found a potential that would turn the whole unemployment picture upside down. Did you know that in 2008 74.5 million, 16 to 55 and older, weren't even looking for work, for one reason or another, and if just ten percent suddenly changed their minds, 7.4 million more souls knocking on doors or hitting the streets could be a real back breaker.

ricksfolly
Here's another one. In recent years, many companies discontinued traditional pensions--so-called defined benefit plans. Instead, they offered their workers 401(k) plans and similar defined contribution retirement plans that forced workers to pick up a greater share of the tab. How are they doing? Not so well:

Even before the financial crisis, the average balance in 401(k)s for workers nearing retirement was just $78,000. After the market plunged, that average was reduced to about $56,000, according to Munnell's calculations. That's just not enough for a comfortable retirement, says Roger W. Ferguson Jr., president and chief executive officer of TIAA-CREF, the financial services company that offers retirement plans for employees in the academic, medical and nonprofit fields.

"Many families, at this stage, are short $250,000 from what they're going to need," Ferguson says.

401(k)s Still Fall Short As A Retirement Strategy : NPR
So what are these people going to do? They can't afford to retire, and many will stay in the work force longer than they otherwise would have, or they'll be competing for jobs with everyone else. This will put pressure on the unemployment rate for quite some time.
 

phattonez

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5.5% to 9.5% is not a 4% rise. Out of a sample of 1000 you went from 55 unemployed to 95 unemployed. (95-55)/55 is about a 73% rise in unemployment.
 

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In today's edition of The New York Times, there is an article that highlights the grim reality that training unemployed workers has only a small impact. It reveals:

Hundreds of thousands of Americans have enrolled in federally financed training programs in recent years, only to remain out of work. That has intensified skepticism about training as a cure for unemployment.

Even before the recession created the bleakest job market in more than a quarter-century, job training was already producing disappointing results. A study conducted for the Labor Department tracking the experience of 160,000 laid-off workers in 12 states from mid-2003 to mid-2005 — a time of economic expansion — found that those who went through training wound up earning little more than those who did not, even three and four years later. “Over all, it appears possible that ultimate gains from participation are small or nonexistent,” the study concluded.


This lack of effectiveness becomes an even more urgent issue when one considers that there is a significant structural component to today's elevated unemployment problem. At the same time, aside from the reality that there are presently about 5 unemployed persons for every job opening, the U.S. employment services market is fragmented. Although sectors designed for administrative workers, senior managers, and persons with specialized skills are reasonably effective, those sectors do not capture the majority of unemployed persons.

Those deficiencies raise a fundamental question: How can policymakers address structural unemployment. There are no magic bullets to quickly address structural unemployment, which is fundamentally a mismatch between prospective employees' skills and the demands required in available job openings. Cutting payroll taxes would not eliminate that mismatch. Training, likely because it is not very specialized or intensive, does not either.

One solution that would offer better prospects for erasing the skills mismatch--and those prospects are borne out in unemployment rate differentials, whereby the unemployment rate for those with a Bachelor's Degree or above is less than 5%--would be a fresh college degree, but the costs of such an approach (providing funding for unemployed workers to cover such costs) would be prohibitive. What this leaves is perhaps a new training approach modeled after Executive Education programs (e.g., an Executive MBA) that would be an intensive one-year program coupled with rigorous career services support that would connect program "graduates" with firms. A well-designed and focuses program could potentially address the skills mismatch. Such a move should be tested on a pilot project basis to determine its effectiveness.

Even if it proves effective, it would not rapidly reduce the unemployment rate. Until the economy is in the midst of a sustained recovery and aggregate demand is stable or growing, job creation will remain far from robust. However, if the pilot project proved effective, it could be expanded. If so, there would be a training approach that actually would provide a mechanism for addressing the structural component of unemployment. Over time, such an approach would allow far more job applicants to participate in the employment market than would otherwise be possible e.g., if they were locked out due to a fundamental skills mismatch. For now, given the large structural component to the unemployment rate and absence of effective solutions, it would make sense to experiment with the above-described idea, as well as others, to try to develop a policy and program mix that could better address structural unemployment.

Finally, the federal government should resist gimmicks designed to discourage youth from pursuing a college education. The current inadequacies of training offer a hint that such gimmicks would only leave youth underprepared and uncompetitive for the economy. In the longer-run, it would lead to a lower standard of living for those young people.
 

phattonez

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Of course training won't work. Why get a job that's offered to you when you think you can get something better later and you have unemployment benefits to fall back on? There is no reason. Take away the unemployment benefits, and people will stop waiting and start working.
 

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In today's edition of The New York Times, there is an article that highlights the grim reality that training unemployed workers has only a small impact. It reveals:

Hundreds of thousands of Americans have enrolled in federally financed training programs in recent years, only to remain out of work. That has intensified skepticism about training as a cure for unemployment.

Even before the recession created the bleakest job market in more than a quarter-century, job training was already producing disappointing results. A study conducted for the Labor Department tracking the experience of 160,000 laid-off workers in 12 states from mid-2003 to mid-2005 — a time of economic expansion — found that those who went through training wound up earning little more than those who did not, even three and four years later. “Over all, it appears possible that ultimate gains from participation are small or nonexistent,” the study concluded.


This lack of effectiveness becomes an even more urgent issue when one considers that there is a significant structural component to today's elevated unemployment problem. At the same time, aside from the reality that there are presently about 5 unemployed persons for every job opening, the U.S. employment services market is fragmented. Although sectors designed for administrative workers, senior managers, and persons with specialized skills are reasonably effective, those sectors do not capture the majority of unemployed persons.

Those deficiencies raise a fundamental question: How can policymakers address structural unemployment. There are no magic bullets to quickly address structural unemployment, which is fundamentally a mismatch between prospective employees' skills and the demands required in available job openings. Cutting payroll taxes would not eliminate that mismatch. Training, likely because it is not very specialized or intensive, does not either.

One solution that would offer better prospects for erasing the skills mismatch--and those prospects are borne out in unemployment rate differentials, whereby the unemployment rate for those with a Bachelor's Degree or above is less than 5%--would be a fresh college degree, but the costs of such an approach (providing funding for unemployed workers to cover such costs) would be prohibitive. What this leaves is perhaps a new training approach modeled after Executive Education programs (e.g., an Executive MBA) that would be an intensive one-year program coupled with rigorous career services support that would connect program "graduates" with firms. A well-designed and focuses program could potentially address the skills mismatch. Such a move should be tested on a pilot project basis to determine its effectiveness.

Even if it proves effective, it would not rapidly reduce the unemployment rate. Until the economy is in the midst of a sustained recovery and aggregate demand is stable or growing, job creation will remain far from robust. However, if the pilot project proved effective, it could be expanded. If so, there would be a training approach that actually would provide a mechanism for addressing the structural component of unemployment. Over time, such an approach would allow far more job applicants to participate in the employment market than would otherwise be possible e.g., if they were locked out due to a fundamental skills mismatch. For now, given the large structural component to the unemployment rate and absence of effective solutions, it would make sense to experiment with the above-described idea, as well as others, to try to develop a policy and program mix that could better address structural unemployment.

Finally, the federal government should resist gimmicks designed to discourage youth from pursuing a college education. The current inadequacies of training offer a hint that such gimmicks would only leave youth underprepared and uncompetitive for the economy. In the longer-run, it would lead to a lower standard of living for those young people.
Yea, I think our unemployment problem is much more a lack of jobs than it is a lack of training. It does not matter how much training one gets, if there are no jobs there are just no jobs. Individuals should be prepared to accept whatever job then can with the training that they have aquired. Personally, I think that training should be up to the individual and the employer, not the government.

Personally I train most of my people with paid on the job training. Whats wrong with that?
 
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