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-What the government tells us, this is the current unemployment rate in America? My next guest says, "10.6 is a more accurate rate" and he would know.
Keith Hall, used to be the head of the Bureau of Labor Statistics from 2008 to 2012.
Sir, thank you very much.
What do you mean-- You're almost three percentage points higher than what the published rate is.
-Well, that's right.
The unemployment rate is the most widely cited, most closely-watched economic statistics, and it's actually highly flawed.
It's got a definition from the 1930s and it's actually a very crude measure.
And it's got two kinds of problems.
One, it's too easy to be employed under the definition it uses, and second, it's too hard to be unemployed.
Now, the first respect is too easy to be employed because any time you do any sort of work for pay at all, you're considered employed.
-So, suppose you're an engineer who's been laid off, you help your neighbor trim a tree, you get paid for that, you're employed again.
All right, that's way too easy.
And second, the unemployment part of it.
To be unemployed, you have to have no work at all and you have to be actively looking for work.
You have to be out there sending out your resume, interviewing, and etcetera.
In reality, what happens is people run out of employers to send their resume to, they check with all their friends, and they go into a little bit more of a passive mode where they're checking want ads and awaiting to see if something pops up.
-Well, that's not considered active enough and they become not unemployed, but become just jobless.
-Let's talk a little bit, though, about this number that everyone talks about.
We talked about it quite a bit.
It's a way that they can kind of fudge the number around.
The labor participation rate left the labor-- left that number.
How did they play with that? And what does that mean? -Well, that number just requires people to be awfully active every single month and the real key is you're supposed to be current and active.
And the problem is that things have changed and people become nonactive, even though they really wanna work and they're available for work.
And if they aren't active enough, they get dropped out of labor-- out of the labor force.
They're no longer considered participating.
And what we're seeing with this recession is the participation rate has dropped tremendously.
For example, right now, we have about 11.2 million people who are considered unemployed.
I think a more reasonable number is about 18 million people who should be considered unemployed.
In that labor participation group, they've left the labor force which keeps the unemployment rate artificially low.
That's 6 million difference there, and you put those back into the unemployment rate and you're talking about something that's another three percentage point higher than it is right now.
-And you know, this is a real-- this is a real disconnect.
You know, if you look at something simple like the employment ratio, which are the numbers I actually prefer, what share of the population has a job? Well, that number went from 63% before the recession to 59.4% at the end of the recession.
Since the end of recession, that's only dropped further to 58.7%.
So, a short-- a smaller percentage of the population is now working, yet the unemployment rate went from 10% down to 7.6%.
That's a problem.
Can you also give us a sense of the shift in employment where people are going from jobs from and jobs to? -Well, a lot of the recovery right now has been fairly broad, but it has been great anywhere.
We haven't had really strong growth anywhere.
We're still down a lot of jobs in manufacturing, down a lot of jobs in construction.
The real thing is we just aren't getting enough-- strong enough job growth to sort of keep up with population growth, in particular.
So, a lot of the people who aren't being counted, for example, are young workers, and that's a real problem because young workers now are coming up.
People under 25 years old, for example, right now, are way overrepresented in this uncounted job group that I'm talking about.
-All right, Keith Hall.
We're gonna leave you there.
Thank you very much, sir.
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