First, allow me to explain the title of the thread. In any recent casual discussion of the U.S. economy, it has become fashionable to claim that the official unemployment rate as issued by the U.S. Bureau of Labor Statistics (BLS) is not the real unemployment rate and that the real rate is much worse. For example, on June 3, 2011, BLS said that, for May 2011, the U.S. unemployment rate is 9.1%, but I saw someone in another thread here claim that the "real" rate was 27%.
Now, 27% is a much bigger exaggeration than any reasonable economist, even one who believes the official BLS rate isn't the real rate, has ever stated. The usual figure that people who claim there is a real rate that BLS is missing would have only been 15.8% for May 2011. 15.8% is the figure known to BLS as the U-6 unemployment rate. BLS has a six-point scale by which it considers "[a]lternative measures of labor underutilization", which the U-6 is the most expansive and highest number. The official rate (9.1%) is the U-3 rate.
Claiming a real rate that is worse than the official rate is an example of cherry-picking the worst possible number. Anyone could equally cherry-pick a rate that's smaller than the official rate and claim it the real unemployment rate. You could break down the unemployed population by reason of unemployment. For example, in May 2011, only 59.8% of the unemployed were unemployed because they lost their jobs. Others were unemployed because they voluntary quit, they reentered the labor force after a period of being out of it, and they are new adults or new immigrants.
Using the same logic that people use to claim there is a "real" unemployment rate that is different from the official rate, I could claim the real rate is only the percentage of the unemployed who lost their jobs. And for May 2011, that would give a "real" unemployment rate of 5.4%.
Me claiming the "real" unemployment rate is 5.4% would be a cherry-picked number that's minimizes unemployment. So, how about keeping with the time-tested official BLS figure that has been the unemployment rate for decades (9.1%)? Huh?
Now, 27% is a much bigger exaggeration than any reasonable economist, even one who believes the official BLS rate isn't the real rate, has ever stated. The usual figure that people who claim there is a real rate that BLS is missing would have only been 15.8% for May 2011. 15.8% is the figure known to BLS as the U-6 unemployment rate. BLS has a six-point scale by which it considers "[a]lternative measures of labor underutilization", which the U-6 is the most expansive and highest number. The official rate (9.1%) is the U-3 rate.
Claiming a real rate that is worse than the official rate is an example of cherry-picking the worst possible number. Anyone could equally cherry-pick a rate that's smaller than the official rate and claim it the real unemployment rate. You could break down the unemployed population by reason of unemployment. For example, in May 2011, only 59.8% of the unemployed were unemployed because they lost their jobs. Others were unemployed because they voluntary quit, they reentered the labor force after a period of being out of it, and they are new adults or new immigrants.
Using the same logic that people use to claim there is a "real" unemployment rate that is different from the official rate, I could claim the real rate is only the percentage of the unemployed who lost their jobs. And for May 2011, that would give a "real" unemployment rate of 5.4%.
Me claiming the "real" unemployment rate is 5.4% would be a cherry-picked number that's minimizes unemployment. So, how about keeping with the time-tested official BLS figure that has been the unemployment rate for decades (9.1%)? Huh?