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Shadow Unemployment


The headline-making unemployment figure (currently 10.0%) is only one of several measures for unemployment. What we hear is called the U3 statistic. There is also a U6 statistic:

This isn’t a third-rate tribute band, it’s the underemployment rate, and it tracks people who work part-time, and people who’ve given up looking for work altogether. This rate is currently at 17.5%.

Seeking Alpha says the U6 rate is considered by some to be a better gauge of true unemployment than the sugar-coated malarkey peddled by the BLS.

U3 assumes that a person is unemployed only if he is actively seeking a job and that a person is employed even if he is not working full-time hours. U6 stands at 17.3%.

The average number of hours worked is an important consideration in determining how well our total economy is producing wealth and value.

The workweek was sliced this cycle from 33.8 hours to a record low 33.0 hours — the labour input equivalent is another 2.4 million jobs lost.

The average workweek is now up to 33.2 hours. I’ll accept the calculation from a reliable source, and extend it to say that every tenth of an hour of average workweek is equivalent to 300,000 jobs.

Last months rise of .2 hours is like creating 600,000 jobs. I am surprised the Failed Obama Administration™ hasn’t forced that into the headlines. Maybe because it would mean acknowledging those 2.4 million jobs-equivalent lost. And it might make people more curious about the meaning of the reported statistics.

If people learned about U6, and starting using it as a better measure than U3, it would be a huge psychological blow. Nothing in the real economy would change. But by counting the shadows, unemployment jumps 7 points.