ECOn - The US unemployment numbers are a lie

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NYPost

THE U.S. UNEMPLOYMENT NUMBERS ARE A LIE

By JOHN CRUDELE

July 31, 2001 -- HOW can this country's unemployment rate be so low when so many people are being laid off?

The answer: smoke, mirrors - and laziness on the part of the media.

The unemployment rate in the U.S. should really be about 5.2 percent right now, a lot worse than what Washington will probably claim on Friday.

That view was reinforced last Friday when Washington reported the worst economic conditions in nearly a decade. That higher unemployment number is what you get when you make a guesstimate based on the huge number of people who are now going into their state unemployment offices and asking for benefits.

There are a lot of different ways to come up with any economic stat. But the federal jobless numbers have been remarkably low considering how many hundreds of companies have announced huge layoffs in the last few months.

Just last week, for instance, Hewlett-Packard, JDS Uniphase, Reuters and Lucent announced that thousands of workers would soon be let go. Those announcements are part of a steady stream of cost-cutting measures that have workers across the country quaking.

But you don't get that sense of bloodshed from Washington's numbers. While the unemployment rate has risen from 3.9 percent to 4.5 percent in recent months, the kind of job cuts we are seeing probably translates to an unemployment rate that is 0.7 percent higher than what the government is saying.

That means millions of unemployed workers are not being acknowledged by the government. Here are some numbers.

So far this year, for instance, companies have announced that 777,000 workers were being let go. That's triple the layoffs at this time last year. And the downsizing is much greater than happened during the 1991 recession, according to John Challenger, whose firm - Challenger, Gray & Christmas - monitors the job market.

The current unemployment rate, says Challenger, "certainly doesn't reflect the heavy, heavy downsizing we've seen."

On Friday the U.S. Labor Department will announce the job figures for July. Experts believe that the government will disclose that more jobs were lost to the recession in July and that the unemployment rate either stayed put at 4.5 percent or inched up by one-tenth of a percentage point.

At that rate, there is no way the federal government's numbers will ever catch up to where they should be.

John Vail, an economist with Fuji Futures Inc. in Chicago, tells me that this year there has been a 42 percent increase in the number of people collecting unemployment insurance from the states. "That's solid data, from the states," says Vail, who, like some of us, thinks the federal numbers are vastly understating the unemployment problem.

"That indicates that unemployment is rising much more rapidly than what is shown in the federal monthly report which is based on surveys and estimates," says Vail.

I've said in this column before - and others, including The New York Times, are now repeating it - that the unemployment rate in this country would be closer to 10 percent if people who have given up looking for a job were counted.

But even if you don't include those "discouraged workers," as Washington calls them, the situation is probably as bad as you think from anecdotal evidence.

Vail calculates that the unemployment rate should be at 5.2 percent. Other people who are using a totally different set of numbers agree with that calculation.

* Please send e-mail to:

jcrudele@nypost.com

-- Anonymous, July 31, 2001

Answers

Articles like this make me even more relieved that Sweetie was able to land a job (the written offer arrived via FedEx today). However, he got his foot in the door because of an associate, a former co-worker, who works at the company. If you haven't been networking, I'd suggest you do so now. Ring up old friends you haven't talked to in a while. Join a professional group. You never know when that pink slip will turn up and in this economy, you need an "in" to get a job.

-- Anonymous, July 31, 2001

Just found out that a friend had been laid off. Part of a small group that gets together very infrequently to do a birthday movie. Invariably the conversation at dinner beforehand was congratulating her on her accumulating stock options, a wealthy person indeed on paper. I know she has been fiscally responsible, but it has to be a real kick.

I think I read this morning that unemployment claims, or something along that line, were down for this past month. If so, I think that means the (official) unemployment rate may have dropped.

-- Anonymous, July 31, 2001


if the fed unemployment stats are based on the number filing for benefits, then it will be low.

there are those that have exhausted the benefits allowed and are still not working. They are not being counted. so it would be fair to say that the actual number is more than any stat you read about. Just look at all the homeless, which of course doesn't mean that all of them are jobless, but some are, and they aren't included in any of the stats.

then there are those that are not eligible for benefits at all. A truly rotten position to be in.

-- Anonymous, July 31, 2001


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