CNBC: The 'Real' Jobless Rate: 17.5% of Workers are Unemployed

Thursday, 19 Nov 2009 | 4:55 PM ET
By: Jeff Cox, CNBC.com

As experts debate the potential speed of the US recovery, the actual unemployment rate that includes discouraged workers is often overlooked: nearly 1 in 5 Americans is either out of work or under-employed.

According to the government's broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994. During the Great Depression 25 per cent of Americans were unemployed.

The number dwarfs the statistic most people pay attention to—the U-3 rate—which most recently showed unemployment at 10.2 percent for October, the highest it has been since June 1983.

The difference is that what is traditionally referred to as the "unemployment rate" only measures those out of work who are still looking for jobs. Discouraged workers who have quit trying to find a job, as well as those working part-time but looking for full-time work or who are otherwise underemployed, count in the U-6 rate.

With such a large portion of Americans experiencing employment struggles, economists worry that an extended period of slow or flat growth lies ahead.

"To me there's no easy solution here," says Michael Pento, chief economist at Delta Global Advisors. "Unless you create another bubble in which the economy can create jobs, then you're not going to have growth. That's the sad truth."

The government can, in fact, create jobs as FDR did during the Great Depression with the Civil Conservation Corps. Undoubtedly the GOP will describe this as 'socialism.' It is not clear if the corporate world has the desire or wherewithal to start employing Americans again. Under the Bush era Republicans, productivity, off shoring and H1B visas were more important than hiring new American employees.

The Obama Administration is working with the House and Senate on an employment bill that may provide help with medical insurance for the unemployed and create 750,000 temporary jobs. This will reduce the unemployment rate by around one per cent.

The government should hire some new permanent employees. Secretary of Defense Bob Gates noted that one carrier task force group has more men and women in it that the entire state department. America clearly needs more diplomats. We should also hire more auditors to ferret out Medicare and Income Tax fraud. The Department of Labor also needs more employees particularly OSHA inspectors.

A government job is more stable and beneficial than than most civilian jobs. Government employees can retire after 30 years, they get paid holidays, sick leave and more generous vacations.

More government jobs and less corporate welfare might be a good prescription for a recovery.

See the rest of the story at http://www.cnbc.com/id/34040009

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