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The real unemployment is much higher and most Americans know it

by By Ken Braun    •    Michigan Live

unemployment-numbersJust one third of Americans know the official unemployment rate is around six percent, according to the latest Pew Research Center News IQ Quiz. A tiny 4 percent cited a lower total, while a whopping 45 percent guessed much higher.

Past versions of the Pew quiz have often been portrayed as a reason to bemoan the ignorance of the American people. This one has plenty of that go around. With four multiple choice options to select from 40 percent couldn’t identify Ukraine as a former component of the Soviet Union.

But regarding the unemployment rate, it’s the official statistics that don’t properly identify reality.

The U.S. “civilian noninstitutional population” – the total count of civilian adults – grew by 217,000 in September, according to the latest jobs report from the U.S. Department of Labor. Those new entrants represent immigrants, young people coming of age, military personnel re-entering the civilian world, and so forth. Total U.S. population grows by about 190,000 each month, so for our economy to remain healthy a big chunk of those 217,000 new adult residents should have or be seeking jobs.

But the jobs report also shows the U.S. labor force decreased by 315,000 last month. There’s a lot of ways to leave the labor force, such as death, retirement, going to college, and disability. Just giving up looking for work is another option.

Regardless of reasons, the net effect of a steadily rising adult population and sharply falling labor force isn’t pretty. It’s as if 217,000 adults joined the economy during the last month and yet made no attempt to help out. And on top of that, an additional 98,000 who were doing something in August also halted any attempt to pull a handle on our economic wagon in September. The headline number released last week – 248,000 new jobs created during September – pales in comparison to the much larger exodus of job seekers from our labor force.

A similar result occurred in August: 203,000 new members of the adult population joined, while the labor force shrunk by 268,000.

The culprit is the rapidly declining labor force participation rate. Pre-recession, it was 66 percent of the adult population or higher, but has now been at 63 percent or lower for all but one month of the last year. Looking for the difference between those two numbers can obliterate the officially stated unemployment rate of 5.9 percent.

The Economic Policy Institute, a Left-leaning think tank supported by labor unions, has factored out the retirees and other demographic exits from the labor force and still comes up with more than 6.3 million “missing workers” not counted in the official unemployment statistics. EPI says honestly counting them as unemployed zips the real September unemployment rate up to 9.6 percent.

Where’d they go?

The Brookings Institution tabulates more than 5 million “disconnected youth,” Americans between the ages of 16 and 24 who don’t go to school, don’t have a job and don’t have any education higher than a high school diploma. And “Unfit for Work,” a recent National Public Radio report, showed the rate of Social Security disability claims jumped up both suspiciously and dramatically after the 2008 recession.

Those are just two of many statistics pointing at the still unhealthy reality of our job market. While most Americans may not know what the government says the officialunemployment rate is, there’s more than enough evidence to know the real score is much higher.

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Ken Braun was a legislative aide for a lawmaker in the Michigan House and worked for the Mackinac Center for Public Policy. He has assisted in a start-up effort to encourage employers to provide economic education to employees, and is currently the director of policy for InformationStation.org.