Thursday, August 6, 2020


Duplicity and the Unemployment Rates.

April 16, 2020 by  
Filed under Business, Money, News, Opinion, Politics, Weekly Columns

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(ThyBlackMan.com) There will be no good news, when the Bureau of Labor Statistics (BLS) delivers its April jobs report on May 8, 2020, at 8:30 in the morning. It will show high unemployment rates for the general population. It will also, show the black population, which is the first worker group laid-off in any Economic Downturn has slipped into a Great Depression.

The Great Depression defined itself in terms of “being great,” because 25% of the U.S. workforce found itself unemployed. African Americans will reach and surpass this milestone, with the April report. That is why, it is so important, we understand the BLS report, because the official unemployment rates coming from the Trump administration won’t give us the whole story.

The nation’s employment situation has been politicized. Objectivity and who is measured, when it comes to being unemployed in the BLS reports is the subject of much criticism. The truth matters, in the calculation of idle workers in our economy, who want to work.

To understand exactly what I mean, go to the following link at the BLS web site and see for yourself the range of “Alternative Measurements of Unemployment” ( http://www.bls.gov/news.release/empsit.t15.htm ). As you will see, there are six categories and depending on which category is used, presidential administrations can manipulate the “official” unemployment rate, based on the category it uses, for their own political purposes.

Since, the Clinton administration, the category that has been used in reporting the official unemployment rate is U-3. It was during Mr. Clinton’s administration, under his Secretary of Labor, Robert Reich, the redesign of the categories was done ( https://www.bls.gov/opub/mlr/1995/10/art3full.pdf ). When you read the description of who is measured, when it comes to the unemployed, U-3 is not extensive and leaves a lot to be desired.

However, when the more extensive measurement of the U-6 category is used, a true and clearer picture of the nation’s unemployment situation emerges. U-6 measures the total unemployed, “plus” all persons marginally attached to the labor force, “plus” total employed part time for economic reasons, as a percent of the civilian labor force (Note: Persons marginally attached to the labor force are those, who currently are neither working nor looking for work, but indicate that they want and are available for a job, and have looked for work sometime in the past 12 months. Persons employed part time, for economic reasons are those, who want and are available for full-time work, but have had to settle for a part-time schedule).

Knowledgeable and experienced people, who follow these numbers see the U-6 category as being the “real unemployment rate” of the U.S. economy. Here is what the bottom line is in understanding what you have just read. U-3 measures a small group of unemployed workers. So, if you want your result to be a lower unemployment rate, you simply don’t measure everyone associated with unemployment. It guarantees you get a lower unemployment rate.

This is very similar mathematically to the Corona virus pandemic, when it comes to whether or not to do wide spread testing. If you want numbers that reflect a lower spread of the virus, you simply limit the number of people you test, guaranteeing you will get reports showing a lower number of people with the virus. However, if you expand testing, you will get a more complete or comprehensive picture of the rate of the spread of the Corona virus infections in the United States.

Well, when it comes to the unemployment numbers, if you exclude from your reporting, all persons marginally attached to the labor force, “plus” total employed part time for economic reasons, as a percent of the civilian labor force, you are guaranteed to get a lower unemployment rate which is U-3, the Trump administration’s “official unemployment rate.”

To drive home this point, U-3, the Trump administration’s official unemployment rate stated the national rate in March was 4.4%. However, when you look at the U-6 category, which doesn’t exclude the above mentioned persons, you see “the real unemployment rate,” for March was actually 8.7%; a far cry from the 4.4% reported by the media. If 8.7% were “the official national rate of unemployment,” as experts believe, then the true national rate of African American unemployment in March, was much higher; perhaps officially as high as 17%.

Indications are, the April “official national unemployment rate,” will be as high as 12% or more, placing black unemployment above 25%, as the black rate is always close to being twice that of the national unemployment rate ( https://www.bls.gov/news.release/empsit.t02.htm). However, using “the real rate of unemployment,” the African American unemployment rate, will easily surpass the Depression Era unemployment rate of the Great Depression.

The Clinton administration’s change has since been used, by the Bush and Obama administrations and now is being used by the Trump administration. It is obvious, African Americans are hurt the most because of the change, in regard to what presidential administrations state as being “the official unemployment rate.” However, the greater population is also hurt, because we don’t get a comprehensive picture of the nation’s unemployment situation. The devastation, distress and misery created by the current Economic Downturn or Depression is woefully understated, without a clear picture of unemployment.

If you read the October, 1995 article by Bregger and Haugen, on page 24, they state; “This (U-6) is the most comprehensive of the new range of alternative measures,…” of the rate of U.S. unemployment. Yet, President Clinton and Secretary Reich chose to use the U-3 category rate, as “the official unemployment rate.” You can only conclude, because of that decision, the distrust of traditional and professional politicians, at the national level is well deserved and has merit. Their behavior begs the question, “Will traditional, establishment Democrats have the courage to change their old ideas and practices?”

The 2008 Great Recession records, show the recovery of African Americans from this Economic Downturn will be much longer, than any other worker group. In the Great Recession, “the official national unemployment rate” peaked at 10.1% and the black rate peaked 1 year and 9 months later at 16.7%. Thus, as the larger population got rehired, employers continued to lay-off African Americans. Therefore, the expected lag time in hiring back black workers, as a result of the coming Economic Downturn will be longer, as this downturn will be much deeper, rivaling the Great Depression unemployment rates. The increased unemployment checks allotted currently, by the federal government will long be discontinued, leaving African Americans and their families in devastating economic circumstances.

Working class Americans face a great undertaking. They have to convince established Democratic leadership to shorten this Economic Downturn. African Americans, who have faithfully supported the Democratic Party, surely want to prevent a repeat of the 2008 Great Recession’s economic impact on their lives.

We know, Trump’s Tax Cut failed to fuel growth; 2019 GDP DROPPED TO 2.3%. The Federal Reserve projected GDP growth of just 2% or less for 2020, and that was before the Corona virus hit. Democrats, a party who is accustomed to rewarding its constituents with third party programs, have to now face the task of growing this economy. To reduce the toll on working Americans and shorten this Economic Downturn, Democrats have to be bold, act fast and go big.

They should provide, in the short term, a second round of support, when it comes to unemployment and stimulus checks for Americans, assistance to small businesses and financial support to any part of the economy, directly affected by the pandemic, so as not to allow the economy to slide into a Depression. However, long term, Americans need pragmatic solutions that will grow the economy and place the nation on a path of sustained economic growth.

If the right Stimulus to the economy is adopted more layoffs can be avoided. Lost output due to the virus won’t be restored without a strong Consumer Demand Side Initiative. Basic math tells us, Consumers are 70% of our economy. If you give 70%of our economic pie a 10% Tax Cut, you will grow GDP. A 10%, $25,000 Consumer Tax Cut is doable. Baby Boomers, who would be the target of such a Tax Cut, include an equitable number of blacks as beneficiaries.

The GOP has given 5 Direct Tax Cuts to MILLIONAIRES and BILLIONAIRES since 1980, without holding them accountable for economic growth. At the other end of the spectrum, Democrats have given ZERO Direct Tax Cuts to CONSUMERS, who are 70% of our GDP, who we know will grow this economy!

The above question warrants repeating, “Will traditional, establishment Democrats have the courage to change their old ideas and practices and support A 10%, $25,000 Direct Consumer Tax Cut, which will drop $254,100,000 a day into our economy for businesses to compete for and grow our economy out of this Economic Downturn?”

Staff Writer; James Davis

Mr. Davis is a leading expert and consultant in Financial Analysis and Social Dynamics. He is a graduate of Florida A. and M. University (FAMU), a former stockbroker, and a human rights activist who resides in Sanford, Florida. He was awarded the prestigious Governor Haydon Burns Scholarship to attend FAMU and while at FAMU was awarded the first Martin Luther King Scholarship. He is the author of three books, among them is “The Fix This Time,” Boost Your Retirement Income! Simultaneously Create Jobs and Spur Economic Growth (https://www.amazon.com/dp/B00MI3PD2M).

Mr. Davis can be reached through his blog @ https://thefixthistime.com.


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