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US Government Unemployment Numbers Explained by Abbott and Costello
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[Editor’s Note: The following post is by TDV Editor-in-Chief, Jeff Berwick]
We’ve long held to the old adage that there are lies, damned lies, and government statistics. Our work over the last four years has shown that in every way imaginable.
One of the most egregious is official US government “unemployment numbers”. This number has been what they call "hedonically adjusted" (and what we prefer to call hedonistically adjusted) into pure fiction.
While we grimace at taking any US government numbers at face value, even if you take the U-6 published by the Soviet-esque named “Bureau of Labor Statistics” though, it is currently at 13.7%. Even that though, as shown by Shadowstats.com, is well below how unemployment would have been calculated if it were still calculated the way it was in 1994.
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
If unemployment were calculated the way it was in 1994, it would be nearly 25% today in the US.
All kinds of things happened on the way to the statistical fantasyland we live in today, however. Not least of which is that the US government changed the rules (surprise, surprise) and put the cost of unemployment insurance onto the states last decade rather than being paid by the Feds.
They forgot, however, to also put the costs of disability insurance onto the states also… the result? Everyone is now disabled!
The whole thing is a complete joke. Therefore, we thought we’d leave it up to Abbott and Costello to explain how unemployment statistics work in the US.
WHO’S UNEMPLOYED ON FIRST?
COSTELLO: I want to talk about the unemployment rate in America.
ABBOTT: Good Subject. Terrible Times. It's 7.8%.
COSTELLO: That many people are out of work?
ABBOTT: No, that's 14.7%.
COSTELLO: You just said 7.8%.
ABBOTT: 7.8% Unemployed.
COSTELLO: Right 7.8% out of work.
ABBOTT: No, that's 14.7%.
COSTELLO: Okay, so it's 14.7% unemployed.
ABBOTT: No, that's 7.8%.
COSTELLO: WAIT A MINUTE. Is it 7.8% or 14.7%?
ABBOTT: 7.8% are unemployed. 14.7% are out of work.
COSTELLO: If you are out of work, you are unemployed.
ABBOTT: No, Congress said you can't count the "Out of Work" as the unemployed. You have to look for work to be unemployed.
COSTELLO: BUT THEY ARE OUT OF WORK!!!
ABBOTT: No, you miss his point.
COSTELLO: What point?
ABBOTT: Someone who doesn't look for work can't be counted with those who look for work. It wouldn't be fair.
COSTELLO: To whom?
ABBOTT: The unemployed.
COSTELLO: But ALL of them are out of work.
ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed.
COSTELLO: So if you're off the unemployment roles, that would count as less unemployment?
ABBOTT: Unemployment would go down. Absolutely!
COSTELLO: The unemployment just goes down because you don't look for work?
ABBOTT: Absolutely it goes down. That's how it gets to 7.8%. Otherwise it would be 14.7%.
COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?
ABBOTT: Two ways is correct.
COSTELLO: Unemployment can go down if someone gets a job?
COSTELLO: And unemployment can also go down if you stop looking for a job?
COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have people stop looking for work.
ABBOTT: Now you're thinking like an Economist.
COSTELLO: I don't even know what the hell I just said!
ABBOTT: Now you're thinking like Congress.
Despite what they would like you to believe, the government can't reshape economic reality by convincing Americans that unemployment isn't so worryingly high as long as they call most of the unemployed by a different name.
This would be utterly hilarious if it weren't so insulting. This is exactly the nonsense that the government wants you to believe and which the mainstream media reports with a straight face. That's why you should subscribe to TDV Basic where you can get the real news and accurate info, along with actionable advice to help you and your hard-earned wealth survive.
Comments or questions? Email us at TDV@dollarvigilante.com and we may use your email in our Feedback Friday each week.
Anarcho-Capitalist. Libertarian. Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.
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