Summary of U.S. Real Unemployment – July 2011

by Leo Hindery, Jr.,
Chairman of the Economic Growth/Smart Globalization Initiative at the New America Foundation

Our Summary of U.S. Real Unemployment makes these three adjustments.  It also identifies average weeks unemployed, job openings, and the all-important “Jobs Gap” that needs to be filled in order to be at full employment in real terms.  Accordingly, in July:

• The number of real unemployed workers in all categories decreased by 626,000 workers to 29.1 million, a figure still more than twice BLS’s official figure of 13.9 million.  The professional and business services sector, which had relatively strong gains early in the year, increased by only 34,000 jobs; government employment declined by 37,000 jobs, the ninth monthly decline in a row; construction employment increased by only 8,000 jobs, even though mid-summer is usually a strong jobs growth period; and, most important by far, the critical manufacturing sector remained in a deep malaise and added only 24,000 jobs, as the ISM Index of Manufacturing Activity fell 8% to its lowest level since July 2009.  Without the seasonal adjustments for the huge number of teachers that were laid off (but in this case likely won’t be hired back), the overall job numbers were again frighteningly bad.

• Thus, the real unemployment rate is 18.2%, compared to last month’s real unemployment rate of 18.5% and BLS’s official rate for July of 9.1%.

• The number of real unemployed workers has increased by 12.4 million since the start of the Recession in December 2007, and by 4.6 million since the January 2009 Inauguration.

• The Jobs Gap that must be filled for full employment is 21.1 million jobs.

The real unemployment rate, the post-Inauguration job-loss figure, and the Jobs Gap are three critical statistics as we continue to approach the 2012 Elections.  Over the last 80 years or so, the unemployment-related ‘hurdles’ that must be overcome in any quadrennial national election are a BLS official rate of unemployment of no more than around 7.2% (today it’s 9.1%) and a real unemployment rate of no more than 9.5 to 10.0% (today it’s 18.2%).

Officially, the average number of weeks unemployed is 40.4 and the number of workers unemployed a half year or longer is 6.2 million.  The reality is that 10 to 13 million workers have been unemployed a half year or longer, and fully 8.7 million or so workers have now been out of work for more than a year.