You flip on the nightly news and the news anchor says the current unemployment rate is 9.7%. Is that the true rate? What are the implications to the economy? Full employment in the U.S. has been considered to be 5%, but of course the rate is currently almost double.
There is a term called structural unemployment that is creating jobless recoveries and having a direct impact on the U.S. economy driven by consumption. Structural unemployment results from a mismatch between the skills and training of workers seeking employment and needs of employers. China, India, Brazil and Vietnam have created a global labor market where U.S. clerical and office jobs have been outsourced. Automation is reducing the need for workers in many industries. Many of these job losses do not show up in the headline unemployment currently at 9.7%.
In the future, more emphasis will be placed on the U-1 to U-6 spectrum of unemployment rates released by the Bureau of Labor Statistics (BLS).
May 2010 Seasonally Adjusted
U-1: Persons unemployed for 15 weeks or longer, as a percent of the civilian labor force 5.8%
U-2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force. 6.0%
U-3: Total unemployed, as a percent of the civilian labor force
(official unemployment rate). 9.7%
U-4: Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers. 10.3%
U-5: Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force. 11.0%
U-6: Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force 16.6%
All this while the Asian economies are soaring.
India’s industrial production grew 17.6 percent in April, more than economists predicted, strengthening the case for an interest-rate increase even as Europe’s debt woes threaten the global economy.We have sat by while our jobs have been shipped overseas. We have blamed the illegal immigrants for the while collar jobs that are being lost to India and the Philippines. It is time that we band together and fight for our way of life. What we are witnessing is no less than the destruction of our way of life while the richest among us grab an ever bigger piece of the pie yet polls continue to suggest that we will put more of the same party that helped destroy us back in power. We really have become the dumb Americans.
The announcement affirms Asia has so far been untouched by the crisis emanating from Greece, with data from China’s exports to job growth in South Korea and Australia beating analysts’ estimates. The Reserve Bank of India has said it plans to counter inflation by raising rates at a “moderate” pace on risks posed by Europe.
“Demand-side pressures are building up and that may fan inflation,” said Jay Shankar, Mumbai-based chief economist at Religare Capital Markets Ltd. “Monday’s inflation number will be on RBI’s radar and that will hold the key to interest rate settings.”