Imagine it. Actually the news today was that some 440,000 people moved from unemployed status to “discouraged worker” status, meaning they were no longer looking for work but would take it if offered. (Look again at the carefully crafted questions asked in the Household Survey).
The BLS tracks #s of “Discouraged Workers”, “Underemployed”, and also “Long Term Unemployed” (more than x weeks unemployed), what we used to call hard core unemployed.
Remember that the # of “Unemployed” is actually a stock–a sum measured at one point in time. It is the result of two flows–the # of people moving into unemployment status each month less the # of people leaving unemployment status (got hired or else stopped looking, i.e. discouraged worker), plus the # of people remaining in that stock from the previous month.
It is not inconceivable that 440,000 people left the pool of 10,250,000 unemployed pool and gave up looking for a job last month.
Now, what would our unemployment rate be if we hadn’t seen those 440,000 drop out? It would have gone up to 7% from 6.5%, not the reported 6.7%. Add to this revisions DOWNWARD in the previous two months’ payroll figures and you have a really catastrophic jobs picture right now. The official figures actually understate the deterioration unless properly interpreted.
