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The "Real" Unemployment Rate Jumps To 15.6%

While all of the media points to an 8.5% unemployment rate in March according to the U-3 labor report data from the Bureau of Labor Statistics, the number you won't hear anybody talking about is the U-6 unemployment number which jumped from 14.8% to 15.6%.

The U-6 unemployment number includes three types of workers that are overlooked by the U-3 number:

1.) Marginally attached workers - people that want a full time job, have looked for one in the past, but are no longer looking for work.

2.) Discouraged workers - those that have given a job market reason for not looking for a job.

3.) Persons employed part time for economic reasons - in other words, somebody that wants a full time job but has had to settle for part time work.

Two statistical differences worth pointing out between the U-3 and the U-6 numbers is that year over year, the U-6 number has increased by 71.4% comparedto the U-3 number which increased 66.7%. So in other words, the U-6 number is rising at a greater percentage than the U-3 number, more workers are falling through the cracks.

The second point of difference between the two data sets is that in March of 2009 compared to March of 2008, 6.5 more people out of every 100 are unemployed according to the U-6 data compared to 3.4 more people for the U-3 data. This is an alarming change in the course of just 12 months.

The reason these numbers are relevant to a housing recovery is that each month the number of Americans that are able to buy a home for the first time is contracting because fewer Americans have jobs. Additionally, the number of Americans who may lose their home to a foreclosure because of a job loss is rising. In order to make up for these demand and supply imbalances, investment real estate needs to be part of a housing recovery plan.

Posted by Mark MacKenzie on 04/04/2009 10:48 AM

Comments (46)

The "Real" Unemployment Rate Jumps to 15.6% in the ActiveRain Channel

u6 unemployment rate, u3 unemployment rate, bureau of labor statistics, its the housing market stupid

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46 Comments on The "Real" Unemployment Rate Jumps To 15.6%

APR

Mark- Nice points as usual. The U-6 is looking very scary right now.

Do I hear 20, 20-25! 30? 35, 35-40! Going rate is now at 40%

Meet the new boss, same as the old boss.

Mark, thank you for this post, I have often wondered how they computed the rate they announce - it seemed very low. I had always assumed they only counted those on unemployment as it was the only measure I thought they had that was reliable. Very interesting. When I was in graduate school I did research for a psychologist who wrote a book, How to Lie with Statistics... It has colored my outlook ever since.

Those numbers also do not show the effect on minorites or certain urban areas where unemployment for blacks can be well over 50%.

There is so much information in so many places that it is hard to sift through.

Kevin: It is an interesting dichotomy. Wall St. banks continue to get favorable treatment in the name of "credit" while the rest of the country falls off a cliff.

Tony: Thanks for the comment.

Joanne: I agreed with your perception about the "announced" rate of unemployment being low as well. So I did some digging in the BLS report and online, and this is what I discovered, the U-6 number.

Shane: The U-6 number is a comprehensive number. As you know, unemployment will vary depending on a lot of different factors.

Heath: Agreed. The U-6 number is indeed part of the Bureau of Labor Statistics monthly report, it just happens to be buried and given very little attention.

Scary...and so driven by mindset...all we need is more confidence and no one in Washington seems to get that.

Mark - thank you for sharing this information. Great post! But, the numbers are scary!

Excellent points! It feels like the bottom for job losses and the economy in general is close or has already been hit, but I've thought that before.

Thanks for sharing this information. The media, and the politicians, work hard to sugar coat everything. We tend to just sweep things under the carpet and pretend it doesn't exisit.

Remember when they tried to classify a job at McDonald's as manufacturing? LOL

America will get through this, we always do. Realtors just need to keep enough gas in the tank, and stay smart during this tough time.

Many will complain, and it is justified, but those of us that meet the challenges will reap great rewards!

Keep up the great work folks!!!

Have a Profitable Day!

Harrison Painter

Harrison Painter - Gladiator Real Estate Investments

So much in the negative... The u-6 numbers are scarry... I want to concentrate on those that are employed...

Mark, I've never heard about the U-6 number before, but I have always said that the unemployment number has never been accurate. I have always told people that there are the unemployedand then there ar the under employed. Your post goes to show that in essence I have been correct in my thinking.

Nice post and its great to see some accurate info!

Karen: Confidence is certainly lacking, and a lot of that is being driven by Washington and thier policies right now.

Jessica: Thank you :)

Steve: I'm not certain about a bottom yet, despite Wall St., job losses and home values losses are actually accelerating.

Harrison: We agree on this - we will get through this. :)

Caron's Gateway: My post is not intended to be negative. I simply believe that in order for things to change and improve, people need to be aware of what is really going on in the economy and housing market. Based on Washington's policies, I don't think they get it.

Christopher: Thank you. Interestingly, the U-6 data is part of the monthly Bureau of Labor Statistics report, it simply is not publicized. Here is a link to the report: http://www.bls.gov/news.release/empsit.htm

Look for table A-12.

It will get better though...market can't go down forever...

Metro Phoenix housing market finally emerging from ashes

I've been underemployed for about 2 years too, but now am pretty busy.

:) PS

Yikes! I hope I don't fire myself!

Mark - Thanks for this post. It seems like the government is always finding creative ways to spin data, conveniently leaving out important statistics. Numbers like this put a valid reason to why this economy feels as bad as it does.

The Untold story- I like to see wht's behind the numbers. Thanks Mark.

wow thats quite a jump, glad my area is un phased by the economy, NO BOOM, NO BUST, kinda good to live in a little fingerlakes town without any decent jobs!

Mark, Lets not forget the self employed such as building sub-contractors that don't even show up as un-employed. In my area 75% of the sub-contractors have no work at all and the balance are working "part time"

I still think people need to get creative. There are always options for you.

Thanks for sharing this perspective. Like you, I am not a negative person, nor do I thrive on negativity, but I believe part of what is slowing our housing recovery is the lack of agents and clients willing to accept just how far things have dropped, so they can get their homes priced right and sold. Those sellers who do "get it" are getting homes sold, and for fair prices. Buyers are seeing value in these options and getting great deals. I appreciate your perspective

Heck, with all the millions of homes to sell, we will probalby need another 1 to 2 million Realtors. The nice thing about working for yourself is that no one can fire you and you don't become one of Mark's 15%er's. I wish we could get some more Realtors to come to work for us. There are too many prospects, contacts, buyers and sellers to keep up with. Don't you have this problem in your market too??

Oh, I forgot to mention, I've never been a day in my life without a job and I turned 59 yesterday. Well, I did take a couple of years off from age 52 to 54 and worked two days a week driving the flower delivery truck and 1 day every other week as a golf marshall (paid for my golf). I own my home and I've carried the note on a home for a nice lady and her family for 11 years. She pays on time, when she can. My wife owns her Geo Tracker (1997 model with crank down windows and a five speed - what can I say, she's a Brit and does not know how to drive an automatic). We've got some part of our 401K and IRAs still invested. We go home to England every year to see her mother and we try to go to Texas twice a year to see my folks and siblings. We are not wealthy but we are Rich in Spirit, belief in America, and Love for each other. I recently bought a DVD player for $29.00 when they told me they don't put new releases out on VCR any longer. I think what I'm trying to say is get an Education, live within your means, stay out of debt (and pay your debts) and get involved in your community. And quit Whining - nobody likes to hear you whine!!

If I read your last statement correctly, then that means that realtors everywhere should expect for the investor segment to come out of the woodwork, because in order to stimulate the type of jobs needed to fuel a rebound, there has to be projects like keeping houses in good shape around.

It is a great idea, I would just like for those investors to be local, and remain so - out-of-town investors on average are not a totally bad bunch, but some of them don't really care about the communities they've invested in, they're only there for the quick buck, and that's not good. Indeed, that's a part of what lead to the bubble that burst in the first place, imho.

MarK: Where do I fit in? I am, and have been on unemployment for 10 months now; not because of Real Estate but because I am the Executive Administrator and General Contractor of our Construction Company also and was paid a salary.

Employers, such as I am, don't have to look for jobs, per se, but our employees, do.

Obama scares me....never in our 30 year history of being licensed, have we been out of work. Never in that same period of time, have we EVER had to lay off an employee...now, including myself.

thanks, debra

Mark,

I agree with Mike Lewis. I have felt all along that the unemployment numbers have not been representative of what's really going on. Your information on the U-3 and U-6 numbers makes a lot of sense. There are so many more than that however that are not included in any of this reporting. Lots of self-employed people are out of work or have significantly less of an income. That includes REALTORS. Appraisers, Contractors, etc. - we cannot collect unemployment and do not fit into any of the U-3 or U-6 numbers. I'm still hanging in there and working the real estate market the best that I can in my area and remain optomistic that things will turn around. Thanks for your blog.

Lori

With almost 700K more in March and self employed people hard to track it can only get worse until it gets better.

Mark, the sad part of the unemployment numbers is that most economists predict them to continue rising into next year. Even after the recession ends, unemployment can rise due to the lag time in hiring as the economy recovers.

Hi, Mark,

Good article, but it is even worse than any of us know! How many (millions?) folks are unemployed but unable to collect unemployment compensation because they are self-employed individuals who were not paying into the unemployment tax revenues!!???

Hi Mark -- One only hears passing reference to other categories (U6) mentioned briefly on the air when it comes to unemployment and it never seems to garner any traction in the press. I agree with you.

Mark,

I always learn something new from your posts. I'd never seen the U-6 stats but these are categories that make a lot of sense. Thanks.

Last year I reached a low point with no $$$$$. But I was not "unemployed" as I was self employed and have been most of my life. God provided, but I was scared to death. Although things are going much better now I am still tight with a buck. underemployment and fear have a big ripple effect on the economy.

The best thing we can do is fight for a government to get off our back. GO TO A TEA PARTY!

APR

Patrick: I agree with that. :)

Frank & Jodi: That is the great thing about being a small business owner.

Jason: Agreed. It is interesting to me that this data is not more widely reported.

Phil: Thanks for commenting.

Dan: Unfortunately even areas that never had a boom are seeing a bust, places like Detroit are one of them.

Mike: I have thought about this on my occassions. There are plenty of people that still have a "job" vot whose income has declined this past year.

Chuck: This is a tricky topic. I agree there are indeed always options, but for some people those options are getting a $10 hourly job after they have been laid off from their $100K a year job. There are still jobs out there, but for a lot of people they won't be able to replace the job they lost in terms of earning potential.

Team Carroll: I agree with you 100%. We need to be realistic and have honest conversations with out clients. The sky is not falling but we also can't ignore the forces that are working against us.

John: Consider yourself blessed. There are millions of Americans that are struggling right now through no fault of their own. Bad things do happen to good people - even financially responsible people. I hope you are not insinuating that I am whining as I would take offense to that. I write about solutions, not complaints - there is a big difference.

William: You bring up some really good points in which I completely agree with.

Debra: Things are indeed changing. :)

Lori: These small business owners like agents, appraisers, etc, don't fall into this report as we are not employed or unemployed. It is difficult to get a reading on how these business owners have been impacted in terms of their income, but I am sure it has not been positive for the majority.

Joe: Agreed. You try to identify a bottom with these things by following the month over month changes - we are not seeing a bottom in these numbers yet.

John Mulkey: I have read about this as well. Contrary to some of the comments, I am not complaining, just communicating why real estate is going to continue to face a head wind for a recovery and why investment real estate should be a part of a recovery plan.

Chuck: Agreed. A couple of other people have commented about this too, this is not a small number.

Chris: Thanks, I am still surprised as to how this number simply gets swept under the carpet.

Wayne: Thank you very much, that means a lot.

Gene: Thanks for sharing that information with us, and congratulations on sticking with this. Tea Party indeed.

Mark Twain's thought on statistics:

There are lies,

There are damn lies,

Then there are statisitics

The government has been blatantly cooking the books for both employment/unemployment and inflation since Nixon. Both Reagan and Clinton took it to new levels.

I'm not drinking the kool-aid their serving.

Mark Twain's thought on statistics:

There are lies,

There are damn lies,

Then there are statisitics

The government has been blatantly cooking the books for both employment/unemployment and inflation since Nixon. Both Reagan and Clinton took it to new levels.

I'm not drinking the kool-aid their serving.

some how got logged out when commenting above

I continue to be amazed at how many IMPORTANT statistics are intentionally buried and not brought up as a real concern in our economic situations. Thanks Mark for your post.

Thanks Mark. Where do you think it will top off?

Rick: Thanks for the comment(s). I agree and thanks for pointing out this is not a Democrat or Republican thing, this is a Washington thing.

Craig: I agree, I don't think there is a more important statistic other than employment and for this type of information not to be widely disseminated is interesting.

Gabe: That is a really good question that I don't have an answer to. It looks like we still have a ways to go. The actual monthly job losses are still rising month over month, that is never a good sign especially considering in just the past five months we have lost nearly 3 million jobs:

Mar: 663K

Feb: 651K

Jan: 598K

Dec: 524K

Nov: 533K

(Source: BLS)

Hi Mark,

I read a synopsis of this on MSN as well. The way the government calculates unemployment is atrocious. Just as bad the the calculation for 'inflation' and CPI.

Stuart

Mark,

The recovery we all are looking for has battles to fight on many fronts. The key one involves rising unemployment that will keep more people from buying homes, or even doing refinance.

APR

Don't forget people that don't qualify for unemployment, basically anyone out of a job that receives a 1099 at the end of the year... Say mortgage brokers and real estate agents? I bet that number could even be higher!

APR

Well no wonder the numbers are not being counted correctly - it's the government doing it. Want it screwed up and skewed, they're the people for the job. Let's also used a broken $3000 calculator you can get at Walmart for $5.

I agree with Todd on the 1099 folks also. They are never considered.

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