The True Gauge of the US Employment Picture

How the unemployment figure, U-3 as it is called, is arrived at has been changed many times since the 1930's. The latest change was during the Clinton presidency when those that had been out of work for more than four weeks, and the govt. concluded they no longer were looking for work, were dropped from the count of the unemployed. This distorts the U-3 number, pushes it lower and creates a sense of improvement whether there is any or not. This indicator means nothing.

There are approximately 150,000 new entrants into the labor force each month. High school/college graduates, people that turn working age and legal immigrants. So a monthly jobs creation of 200,000 actually only absorbs, creates 50,000 workers above the new entrants. This is why the Employment Ratio gives a much better sense of the true state of US employment. See chart: Click for larger image.

In January of 1999, over twelve years ago, 64% of the working age population was employed. As of March 2011, 58% of the working age population is employed. The governments own stats show an increase of thirty million workers since January 1999. http://www.bls.gov/fls/flscomparelf/population.htm#table4_1

Simple math shows that in January 1999, approximately 128 million were employed. In March 2011, approximately 140 million. During that time frame, working age citizens have increased by 30 million but there are only 12 million more working, a gap of 18 million unemployed, or 9%, the current U-3 figure. Approximate.

The U-3 figure in January of 1999 was 4.3%. Currently, a 9% short fall of workers between now and then. Without the governments massaging of data, done to show their policies are working, the true unemployment rate is over 13%. To achieve full employment defined by the governments flawed U-3 rate of 5%, including the current level of 150,000 new entrants into the work force monthly, 200,000 new jobs per month will take 14 years to achieve full employment.