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Blog Posted in avatar   Sharon Secor's Blog

Unemployment In America: The Numbers Tell A Disturbing Tale

blog:2006:1::0
By Sharon Secor
Posted Feb 12, 2009 in Business
As news reports throughout the nation indicate, the rate of unemployment is on the rise. Combine that with, as CNN.com reported on February 10, 2009, fewer job openings overall and, according to a Wall Street Journal article published on February 6, 2009, the increasing number of states that are running out of money for unemployment benefits, and a disturbing trend becomes apparent. Once a bit of deeper research is done, such as looking at the various measures of unemployment, including those in use before the government changed the standard to measures that conveniently reflected lower numbers, and the current employment situation moves beyond disturbing and well into dire.
As a recent article published on the Nation website points out, “not only does unemployment ruin the lives of the people enduring it; it kick-starts home foreclosure rates and stimulates bankruptcies.” Credit card debt, mortgages and loans don’t go away when a job is lost and, for the overextended, the situation quickly moves from difficult to unmanageable. Naturally, the problems seep into the overall economy, as lenders counting on repayment face mounting losses, retailers relying on consumers see the flow of revenue slow, and state and local governments see a decrease in tax monies collected via sales and other taxes. Unemployment numbers offer a great deal of information about the economy and its current and future health.
On February 12, 2009, Bloomberg.com reported that the current unemployment rate is 7.6 percent, a level that has not been seen in 16 years, and that the number of Americans collecting unemployment benefits is reaching record setting heights, as well, increasing for the fourth week in a row. However, there are analysts that do dispute those numbers, placing the unemployment rate much higher, and do so quite legitimately, with John Williams of ShadowStats.com being one of the most well-known and well documented among them. His calculations push the unemployment rate up to about 18 percent. Even mainstream Wall Street Journal cites a figure higher than 7.6 percent, pegging unemployment at about 13.5 percent. The conflicting numbers lie in the measures used.
The government, for example, no longer includes what some call discouraged workers in their figures, employment seekers who have given up after failing to find employment after lengthy periods of trying, as the Wall Street Journal recently did, using the broader measure that the government no longer uses. Think about that in relation to the current unemployment situation. The Nation article notes a new element in this recession/depression, “the white collar wipe-out,” and goes on to say that “we have no experience in handling the huge numbers of college-educated, technically trained unemployed.”
Those more accustomed to having to do what it takes to get by, even if it means wearing a stupid hat in a fast food joint – the poor, blue collar workers, etc. – will probably fare a bit better than the former high six-figure, big benefits and retirement plan worker unable to find work in his field and mentally unable to descend to filling out that Wal-Mart application to at least keep food on the table. It will probably be hard for mortgage brokers who were wallowing in cash during sub-prime lending madness to imagine themselves flipping burgers, even when they themselves are facing foreclosures in record numbers on those homes bought when the money was flowing and mortgages were easy.
Absent from the official unemployment figures are those that are chronically under-employed, who are unable to find full-time work, those that have to make due with two, three and even more part-time, benefit-less jobs. Independent contractors, freelancers, and others are routinely undercounted or ignored in the official unemployment counts. When people say now cannot be compared to the Great Depression in terms of unemployment, they are more right than they know, but for the wrong reason.
Those using that argument are typically referring to the 25 percent unemployment rate of the Great Depression. Never mind that it wasn’t at 25 percent at the beginning of the Great Depression, but I digress. They say it can’t be a depression because the unemployment figures are much lower now and that the two periods of time cannot be compared based on that. While they are right that it cannot be compared, it is not because of the rate of unemployment being so dramatically different. It is because we no longer use the same measurements of unemployment, with the most recent substantive change in the data used to measure unemployment taking place during the 1990’s under President Clinton’s administration, and thus a comparison between the two numbers, flat out, will be completely inaccurate.
Looking at the unemployment numbers and trends being reported in the media today, people would be best served by applying a bit of critical thinking to those numbers and taking steps to shore up their financial position, as the odds are that the situation is much worse than the official numbers indicate. Important financial aspects to consider include paying down debt, so as to have more financial freedom of movement in case of job loss, and increasing personal savings to cover at least 6 months of living expenses to cover the time between jobs. Whether we are experiencing a recession or a depression, it is clear that there will be significant systemic economic difficulties to deal with in the near future, and those who are prepared will fare better.

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