BLS Statistics Are Really Just BS: Unemployment is Closer to 23%

by Justin Vélez-Hagan

As the Bureau of Labor Statistics (BLS) gets set to release its February employment numbers we can’t help but speculate whether the unemployment rate will rise or fall.  But, the real question should be:  Why do we still follow the increasingly inaccurate BLS unemployment rate at all?

In January, we added nearly 157,000 non-farm payroll jobs to the economy according to the BLS, effectively leaving the media-touted U3 unemployment rate unchanged at 7.9%.  The U3 is the measurement that even the BLS admits does not consist of all persons unemployed.

The BLS generally reports 6 levels of unemployment, with the U6 being the broadest measure and the only one that includes those “marginally attached” to the labor force and the “underemployed,” those who take part-time gigs when they would rather have full time employment.  In addition, “short-term discouraged” workers are included who have not looked for work in the last year because they do not believe there are jobs to look for.

But the U6 level of unemployment, despite remaining at a staggering 14.4% in January (unchanged since October of last year), does not include those who have been discouraged for much longer periods of time.

In this economy—we have now maintained the highest level of unemployment for the longest period of time since the Great Depression (and that’s according to the more benign BLS statistics)—it is not unreasonable to assume that someone seeking employment could be discouraged for longer than one year.

The kicker is that, as workers become discouraged and essentially worse off than where they were, they are measured as an improvement to the BLS unemployment rate.  Once someone becomes discouraged to the point of not even looking for work, they are not counted as “unemployed” for the established unemployment rate.  This phenomenon can effectively maintain, or even lower, the unemployment rate, when in reality more workers are remaining unemployed for longer periods of time.

There have been many attempts to estimate what the real unemployment rate is, that which will include everyone who wants a job and has been discouraged from seeking employment for more than a year or have completely given up because they see no opportunity for finding a job.  But, one in particular is beginning to catch the attention of those seeking more accurate employment information.

Economist John Williams, of Shadow Government Statistics, concludes that the real unemployment rate is closer to 23% and, when including the increasing number of discouraged workers, is actually on an increasing trend.

For those of us who feel discouraged, underemployed, are struggling business owners, or who see signs that the economy is still quite weak compared with other historical economic recoveries, a rising 23% seems more realistic than the comparatively paltry 7.9%.

Although 23% doesn’t bode well for an Administration trying to persuade the country that its economic plans have put us on “the path to recovery,” isn’t it time we started being honest and straightforward with the country so that we can find solutions for real recovery?

Justin Vélez-Hagan is the National Executive Director of The National Puerto Rican Chamber of Commerce and an Adjunct Instructor of Economics at the University of Maryland-University College.  He is also the Sr. Contributing Writer for Politic365 and can be reached at Justin@Politic365.com or @JVelezHagan.