Anybody heard of the augmented unemployment rate?

[lazarus]

Sorry if this is a bit disjointed, I was just throwing some stuff together.

A lot more about this over here: http://bigpicture.typepad.com/comments/2004/01/augmented_unemp.html

http://www.thestreet.com/tsc/basics/tscglossary/augmentedunemploymentrate.html
The augmented unemployment rate is a measure of labor-market conditions, devised by the Fed in 1999. It is an alternative to the regular unemployment rate, which has a narrower scope. Even so, the augmented unemployment rate still gets limited attention.

The regular unemployment rate, a component of the employment report, is calculated by dividing the (seasonally adjusted) number of unemployed by the labor force, which consists of the employed and the unemployed.

unemployment rate = unemployed / labor force

The augmented unemployment rate also takes into account jobless people who aren't counted among the officially unemployed because they haven't searched for work lately, but who would take a job if offered one. Call them job-wanters. It adds the job-wanters to the officially unemployed, and divides the sum by the sum of the labor force and the job-wanters.

augmented unemployment rate = (job-wanters + unemployed) / (labor force + job-wanters)

Interesting chart:

An interesting tidbit:

In December, about 1.5 million persons were marginally attached to the labor force, about the same as a year earlier. (Data are not seasonally adjusted.) These individuals wanted and were available to work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they did not actively search for work in the 4 weeks preceding the survey. There were 433,000 discouraged workers in December, also about the same as in December 2002. Discouraged workers, a subset of the marginally attached, were not currently looking for work specifically because they believed no jobs were available for them. The other 1.1 million marginally attached had not searched for work for other reasons such as school or family responsibilities. (See table A-13.)

From http://stats.bls.gov/news.release/pdf/empsit.pdf, page 3.

So what's the actual unemployment rate?

Total unemployed, as a percent of the civilian labor force (official unemployment rate): 5.4

Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers: 5.7

Total unemployed, plus discouraged workers, plus all other marginally
attached workers, as a percent of the civilian labor force plus all marginally attached workers: 6.4

Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers: 9.6

Hmm...

The most frightening part of all this is the shift to temporary job hiring. Temps have no benefits, in general, and no ability to plan for the future. It's a rough life. It's all good for the company, from a bottom line perspective.

[Frodo]

1. The scary part that people keep missing?

When was the last time that number was HIGHER than it is now?

Wasn't that at the same point in a Presidential election cycle?

How did that guy do?


Also, the "y" axis of your chart looks kinda screwy.

[West Coast Democrat]

2. But this chart doesn't show the rate in 1992

it was probably even worse then, and the graph doesn't seem to be headed for improvement now.

[Frodo]

3. Both true.

I'm just saying it may not sell as well as people here think it will. It's pretty easy to say he's at about the level Clinton was at and doing lots better than raygun or poppy.

The numbers only look bad by comparison to Clinton's second term.


Yes, the numbers were lots worse prior to '92, which is why a total unemployment/underemployment/discouraged number of 9.7% isn't "worst since Hoover" if Carter and Reagan BOTH had NORMAL unemployment that high (and a U6 quite a bit higher).

We need to concentrate more on the PRICE of this performance rather than the performance itself.