Bob Cropf

Unemployment figures are under-reported

In economics, stimulus, Unemployment on February 12, 2009 at 11:06 AM

Last night, in class we talked about under-reporting of the unemployment figures. This is the subject of this Economic Policy Institute website article. The report asserts that actual employment is weaker than the official unemployment rates suggest. the real unemployment rate is probably closer to 10 %. Even at 7.6%, this is the highest unemployment rate in over sixteen years. In his address to the nation on Monday night, President Obama said that the jobs lost in January alone was equal to all of the workers in Maine. Even more startling is the fact that since November 2008, 2.8 million people have lost their jobs. Since the recession started in December 2007, 3.5 million people have become unemployed–that’s more than the total population of Chicago! Bear in mind, however, that in calculating these numbers they did not include those who have dropped out of the job market (or never entered) and it doesn’t include the under-employed.

  1. They are definetly undereported. Also,Maybe we should all go back to old times standards of saving practices. Look at some reports on China’s economy. 70% of there total take home pay per week goes into a savings account where we spend about 30% more than we make on average. Get ready for the nation to be bought out. Check out the article on my blog about the chinese investors taking group tour trips over here to look at foreclosed homes as investments to place their children in who will be going to college etc. in the state! Comment with thoughts on this matter.

  2. It might be good to know how these numbers stack up against the Great Depression era. If the 25% depression era unemployment figure discussed in class last night included all the categories (e.g., dropped out of the job market, never entered, etc.)mentioned above we may be closer than we think to economic collapse–assuming economic collapse is defined in some respects by the Great Depression. If all the categories were not included then we have a ways to go from 7.x% to 25% unemployment to classify the current economic climate as near those of the 30’s in the US. If the latter is the case we may be spending a ton of money for nothing and responding to emotion rather than fact.

  3. I definitely think that we have to re-think out savings paradigm in the US, alter the savings-tax structure to encourage more savings, less spending. I am not sure that comparing the US savings rate and Chinese savings rate is comparing apples to apples though. Though they have dramatically reduced poverty in that country over the past 30 years, they still have a substantially lower per capita income than we have (I would love to see the 70% statistic, I just don’t think the “average” Chinese person has that much disposable income, some, even many, yes, but not the farmers, the factor workers, etc.)- so I don’t worry so much about being bought out by individual Chinese… the Chinese government which owns massive amounts of US debt is another question.

    This is a question about globalization, however. What does a country do when lots of real estate is owned by foreign nationals? How does that affect tax structure and expenditures? Is it necessarily a bad thing? Take property tax for example, that is a tax that generally can’t be exported, unlike sales tax or hotel tax. But if lots of foreign nationals have a second home or other property in the US, it that in effect exporting the property tax (assuming the property in question is not an income producing property, i.e., rental housing or that the foreign national does not works in the US). If the Chinese are willing to abide by our laws, is it really a problem since “land” is not the sole basis for wealth any more? Intellectual property, over which the Chinese are a lot less constrained by property laws (reverse engineering and pirating are BIG in China), is the real driver now, and that isn’t bound by national borders anyway…

    I have very vivid memories of hype and fear about the Japanese buying us out in the 1980s and that didn’t come to pass. In fact, Japanese involvement in our economy has arguably been a good thing (Toyota anyone?). If the Chinese start becoming more integrated into our economy (as opposed to just selling us stuff), there may be an readjustment of currency, the current balance of which is a big driver (not the only one) behind our long-standing trade imbalance with them. An adjustment in currency could have a big impact on the Chinese ability to buy here (improve it in the short run, decrease in the long run) as well as sell here (decrease it in the short run, ??? in the long run)…

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