Every week, US unemployment numbers make headlines, but few Americans understand what these numbers actually represent.  More importantly, these numbers constitute a driving force behind many policy and economic decisions.  Jobenomics believes that policy decisions should be made on those functionally unemployed, which is a much better indicator of economic distress.  The total number of US “functionally unemployed” is 110.6 million people, or 35% of the US population.

The Bureau of Labor Statistics (BLS) calculates six unemployment categories (U1 through U6) every month.  The three most often reported categories are the Long-Term U1 Rate, the Official U3 Rate, and the Total U6 Rate of unemployed and underemployed.  As shown above, in November 2011, the U1/U3/U6 rates equated to 5.1%/8.6%/15.6% or 7.8/13.7/24 million people unemployed respectively.  These rates and numbers are calculated as a percentage of the US Civilian Labor Force, which is currently 153.9 million Americans.  The BLS defines the US Civilian Labor Force as citizens, who have jobs or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized.

 

The U3 “Official” Unemployment Rate is the rate that is most often watched and reported.  In October 2011 the U3 Rate was 9%.  In November 2011, it dropped 0.4% to 8.6%.  This drop made headlines around the world as a potential sign of US economic recovery.  However, buried in the newsprint, 300,000 Americans were also reported to have “simply quit looking for work”.  Where did these people go?  The BLS provides a little light on where these  people went in the Table A-1 “Not In Labor Force” category.  This category is the BLS equivalent of limbo for “those who have no job and are not looking for one”.  From a Jobenomics perspective, these unfortunate souls joined the ranks of the functionally employed and still need to be supported by government welfare programs, by families, or by other means, like crime, in lieu of having a job.

 

As of November 2011, the Jobenomics “functionally unemployed rate” equates to 35% of the US population or 110.6 million people.   35% is derived by dividing 110.6 million by the total US population figure of 312.7 million, as reported by the US Census Bureau.  110.6 million is calculated by adding the BLS’ U6 number (24 million) and the BLS’ Not In Labor Force number (86.6 million).

 

Understanding the functionally unemployed rate of 35%, or 110.6 million Americans, is a much better indicator of economic distress, than the much lower numbers indicated by U1 through U6.  Even better, decision-makers and
opinion-leaders need to balance private sector employment taxpayer numbers (currently 96 million, not including government contractors who rely on taxpayer funding) against 110.6 million functionally unemployed who need
familial or governmental economic support to survive.