So remember how I questioned the validity of the unemployment rate due to the way that it was calculated? I argued that that measure was not an accurate indicator of true unemployment because it didn’t take into account discouraged workers - workers that do not have a job and have given up seeking employment. Well it turns out that the group of discouraged workers is getting larger:
The number of people who have given up on finding work has been steadily rising over the past few months, from 685,000 in May to 796,000 in July.
So even though the most recent unemployment number went down from 9.5% to 9.4%, the number of discouraged workers increased by 111,000. If you take the discouraged workers and add part-time workers who can’t find full time work and add them into the equation, economist John Williams argues in that same column that real unemployment is actually at 20.6% and that number is getting dangerously close to Great Depression levels. Considering Fox News had that number at 16.3% three weeks ago, things have gotten considerably worse. Rather quickly.
So when you hear people like Chris Matthews argue that the Obama economic plan is the best thing since leg tingles, you might want to take it with a grain of salt. Or just ignore it altogether and focus on the numbers above.
