Biggums Watch: Unemployment Is Really 10%, not 9.something %

Deep in the BLS unemployment report, you can find discouraged worker statistics in Table A-12. According to that table, the seasonally adjusted percentage of unemployed workers, including discouraged workers, is 10% for June. That's up from 9.8% in May. As you can see, those numbers are significantly worse -- a half percentage higher than reported unemployment in June. That increase of 0.2% also matches the market's expectation for the increase in unemployment. So much for that kind of good news.

BLS wrote another report specifically addressing discouraged workers (opens up .pdf) a few months back. In it, they included this ugly chart:

(The "marginally attached" data can get tricky, so I won't refer to the top line here.)

As you can see, the worse the recession, the more workers get discouraged. The longer our current recession drags on, the further off the reported unemployment rate will be versus the true number that includes discouraged workers. That also means, once the economy really starts getting better, the unemployment number will unexpectedly jump, because all those discouraged workers will be encouraged to give it another go.

SOURCE: http://business.theatlantic.com/2009/07/unemployment_is_really_10.php