David Stockman Says Unemployment Is Really 42.9 Percent
The government reports today that unemployment is officially at 5.3 percent in May, down from 6.1 percent in May of last year, according to the Bureau of Labor Statistics, an agency of the U.S. Department of Labor. Former Reagan administration Budget Director, David Stockman, says the real unemployment rate in the United States is now about 42.9 percent. Could our real unemployment rate really be that high?
First we need to look at how unemployment is measured and reported. The Bureau of Labor Statistics reports a few different measures of unemployment, including the “U3” unemployment rate that is typically reported by most media outlets as the “official” measure of the rate of unemployment. This measure essentially counts those who are employed and those officially registered as unemployed and actively seeking work to determine the unemployment rate. The U3 rate was reported today at 5.3 percent.
What is called the “U6” unemployment rate, that includes many of those who have stopped looking for work, which leads to a high calculated unemployment rate, is reported today by the Bureau of Labor Statistics to be at 10.4 percent.
The long-term unemployment rate, the Wall Street Journal reported last month, remains at 2.4 million, that is, there are 2.4 million citizens who have been unemployed for 27 weeks or more. These numbers were also based on a report from the Bureau of Labor Statistics.
“The U-3 unemployment rate as a proxy for full employment does not even make it as primitive grade school economics,” David Stockman writes about the official unemployment rate.
Stockman cites the number of 210 million adult Americans, who if they worked 2,000 hours per year, or about 40 hours per week, would deliver 420 million labor hours per year. When compared to the 240 million labor hours per year reported by the Bureau of Labor Statistics, the total workforce of the country is delivering 57.1 percent of those 420 million labor hours, and otherwise stated, 42.9 percent of those hours are not being delivered. Therefore, the calculation of unemployment by this measure is 42.9 percent.
When the number of Americans currently not working, which is reported at 93 million, is compared to that same workforce calculation of 210 million, that calculation of 93 million as a percentage of the 210 million suggests the unemployment rate is 44.29 percent. That calculation is very close to David Stockman’s estimate of the unemployment rate.
Republican presidential candidate Donald Trump also claims unemployment is much higher than the officially reported government numbers, the Inquisitr reports. Trump says unemployment right now is close to 18 percent. Trump has said on many occasions in the past that the Bureau of Labor statistics on unemployment are not accurate, and that the real unemployment rate is substantially higher.
The web site Politi Fact takes a look at Trump’s claim that unemployment is about 18 percent and concludes the claim is false, simply by comparing Trump’s claim with the officially reported (U3 and U6) numbers reported by the Bureau of Labor Statistics. Based on that comparison alone, without looking at any of the reasons for Trump’s claim, Politi Fact concludes that Trump’s claim is false.
David Stockman’s analysis not only cast doubts on the claim that Donald Trump’s unemployment numbers are false, it might also suggest that Trump’s claim of 18 percent might be quite conservative an estimate of the current rate of unemployment in the United States. Either way, 93 million unemployment in a country of about 210 million adults who are able to work, is an extremely high number, using the numbers reported by the Bureau of Labor Statistics.
[Photo of David Stockman from Getty Images.]