The New Underployment Rate: 16.8%

By now, I'm sure everyone knows that the unemployment rate has zoomed to 9.7% from 9.4%. That's interesting in that, last month, more workers lost their jobs than this month and the unemployment rate actually "dropped" from 9.5% to 9.4%. Anyway, any constant reader of my blog knows what I think of the Bureau of Labor and Statistics and their questionable declarations of the unemployment rate.

What a lot of people aren't seeing in that "9.7% Unemployment" headline is the fact that if you add the underemployed to that number, the true unemployment rate is now estimated to be 16.8% (Click to See Full Story: "U.S. Economy: Payroll Losses Slow, Jobless Rate Up"). The underemployment rate is important because it not only includes the unemployed but it includes self-employed contractors who aren't getting work; workers who are arbitrarily taking work that is below their skill levels; temporary workers who would prefer to work full time; and, those who have just given up trying to find a job. All of which are not necessarily picked up the Bureau of Labor and Statistic accounting methods for unemployment.

With the underemployment rate at almost 17%, we are now getting to a point where almost 1 out of every 5 workers is not able to actively participate in the recovery of the economy as normal consumers. Every time a single person loses their job or is forced to work less, it is one less person who will be buying those things that would be needed to put others to work. So, the compounding effect of higher and higher unemployment cannot be ignored, but is being ignored, by this Administration.

All the Stimulus Package has done is create a bunch of part time jobs. Jobs filling potholes. Jobs building tunnels for turtles to cross the road. Jobs building parks or fixing a stretch of road. Jobs clearing bike paths and so on. When each of those projects are done; the people are, once again, unemployed or underemployed. The workers that this Stimulus have targeted have almost exclusively union jobs and they only make up 12.4% of the workforce in this country. Nothing has been really done for the rest of the near 88% of workers who have been shouldering the bulk of the underemployment and unemployment.

This concept of infrastructure spending didn't work during the Great Depression and it isn't going to work now. Back then it was called the Works Progress Administration or the WPA. But, during that time it was jokingly referred to Workers (just) Putting Around. And, from the wasted projects lists that I have seen, I think the same could be said of this stimulus package in today's America.

I think the people of this country are increasingly understanding that this stimulus isn't working. With higher unemployment numbers, there is a real danger that any recovery could be stalled out by the effect of high unemployment rates going even higher and that this could result in an even worse economic situation than we have today. Don't forget that nearly half the home foreclosures are a direct result of unemployment. I think that's why many people, when polled, think the stimulus bill should be scrapped and a new plan drafted.