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The Bureau of Labor Statistics says the real number of unemployed in the United States is 9.1 million in June 2005, or 200,000 fewer unemployed than two years ago. The Bureau however reduces the unemployment tally by 1.6 million, because it says "that" was the number of workers "unable to find work" (marginally unemployed) during the past four week period. Nearly 100,000 more workers were unable to find work in June 2005 than was the case in June 2004, and yet the unemployment rate has fallen to 5 percent, according to the Bureau of Labor Statistics.
A new study by the Federal Reserve Bank of Boston also confirms the true unemployment rate is missing more professional men and women than previously thought. Katharine Bradbury, senior economist and policy advisor for the bank, published a report in April 2005, which shows up to 5.1 million workers in the United States may be left off the count in the past due to age and gender trends.
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Government Puts Unemployment Rate at 5%,
Total Unemployed Figures Show 6.1%
Nonfarm payroll employment rose 146,000 in June 2005 for a workforce of 133.5 million. Manufacturing (seen as the most important sector for the health of economy) lost 24,000 jobs in June, and as a sector has lost jobs 25 of the past 29 months for a net loss of 641,000 since January 2003. The Bureau of Labor Statistics puts the unemployment rate at 5 percent (or 7.5 million,) with 1.3 million considered "long-term" unemployed. There are 141.6 million employed, out of a civilian workforce of 149.1 million, which is "unchanged" the report says. for a participation ratio of 66 percent. The Bureau does not count 1.6 million in the figure of unemployed because the Bureau says these professionals "wanted" work but were unable to find work. This number, the Bureau says, is 100,000 higher in June 2005 than it was in June 2004.
Numbers from the Bureau: |
The federal government measures key economic indicators such as, inflation, gross domestic product, trade imports/exports, and economic growth as indications of the health of society. The Bureau of Labor Statistics by its own admission says the numbers for unemployed are only estimated. But that monthly "estimation" can be cause for a rally on Wall Street.
Why are there challenges to the Bureau of Labor Statistics monthly figures? One answer could be that unlike other recessions in the United States, the recession begun in 2000 hit middle class, professionals, harder than at any time in history, and therefore the topic is of greater interest to the professional population. The new "services" economy in the United States means that an uneducated Wal-Mart worker holds equal chance to finding a new job after layoff as a well-educated MBA or senior level employee from a Fortune 100 company.
Greatest exposure to the true unemployment rate comes with the discrepancy between a rising hiring count that did not drop the number of unemployed. "Indeed, because participation declined fairly consistently from 2001 on, the rise in unemployment during the recession also understated the severity of the slowdown," Bradbury writes.
Participation in the normal business cycle --post recession-- would have meant the number of people employed would return to normal (which is different than measuring the weekly unemployment statistics.) Bradbury writes that 1.6 million people would have joined the workforce, but instead were (not) counted as unemployed, and relative to a 148 million workforce, the addition to 7.9 million unemployed would put the unemployment rate at 6.5 percent from November 2004 to February 2005, not 5.4 percent as the Bureau of Labor Statistics contends.
Bradbury measures participation rates in her study, and finds that the age group of baby boomers in the workforce has increased. From 1948 until 2004 participation rates for men have fallen, while participation rates for women have grown/peaked in the late 1990s and leveled off in the 2000s. Overall participation rates for men have fallen from almost 90 percent in 1948 to about 73 percent in 2004. Women's rates have risen from about 27 percent in 1948 to about 57 percent in 2004.
Based upon age group and gender participation breakdown, Bradbury puts the true unemployment rate for all at about 6.5 percent; about 8.7 percent for men and women not yet at age 55. The number of men and women between the age of 55 and 75 has increased each year since year 1996.
In June 2005, the Bureau of Labor Statistics said they would be updating the way they gather data to be more useful to economists; however, they do not plan to update the way in which data is collected for the unemployed. The Bureau will be updating weekly hours worked and regular earnings for all employees. Adjusted for inflation average hourly earnings in the United States have risen by 1-cent in 2005 compared with 2004.
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