Unemployment’s Hidden Numbers Reveal Weaker Economy

I’ve been talking about this for a while now, and it’s encouraging to see some dead trees taking up the story.

Basically, the unemployment figures that get reported are known as U3, which are simply the number of people who are applying for unemployment insurance. And that’s not a good gauge because a lot of people’s benefits are running out and/or they simply stop looking for work because they’re discouraged.

However, the better measure to look at is U6, which includes U3 and people who are working part time, but would want to work full time. Because a lot of full time jobs have been replaced with part time jobs given the economic downturn.

New York Times details how this affecting some states you expect and some you may not…

Include them — as the Labor Department does when calculating its broadest measure of the job market — and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California.

In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it.

And here’s more of an explanation of how U6 is calculated…

On average, they are working three days a week, and many are struggling to get by. Richard Smith (not related to Bernard) and his wife, Lynn, for example, moved from Michigan to Charlotte, N.C., last summer, after he had been laid off from white-collar jobs by both Ford and General Motors in the last five years. But after talking with 35 headhunters and sending out hundreds of applications, Mr. Smith, who’s 58, still hasn’t found full-time work.

Instead, he works a few days a week at a golf shop, repairing clubs and making $9.50 an hour. The money has helped the Smiths buy a bargain-basement foreclosed house. “You get depressed, obviously,” he said. “But that never changes my attitude about my capability.”

Long story short, it’s tough going out there, and I think our economy has been transformed in such a way that it may never fully recover to what it once was. Especially when you consider that consumption drives our engine, and few can afford to pile on my debt these days.

Here’s the question: Will this be a jobless recovery when taking into account U6?

(Photo: AP via Daylife)