I originally posted this on the Daily Gotham earlier in the week.

Mark Twain said there are lies, damn lies and statistics and his adage applies to unemployment measurement. The Bureau of Labor Statistics (BLS) publishes six unemployment metrics monthly, each referred to in ascending order of inclusiveness of the unemployed as U-1, U-2, etc.

The measure reported by the media as the unemployment rate that severely undercounts the unemployed is referred to as U-3. The U-3 rate is obtained by dividing the narrowest definition of the unemployed by the work force.
The U-3 definition does not include whom the BLS calls discouraged and marginal workers, those who want a job but have given up the search because market conditions and personal experience indicate the process is futile.

U-6 Unemployment counts the marginal and discouraged plus those seeking full time employment but can only find part time work. The Federal Reserve tracks what it defines as the Augmented Unemployment rate, which I’ve read is equivalent to U-6 less part time workers. I couldn’t find any Augmented Unemployment releases on the Fed site and despite major data inclusion differences, some bloggers have used U-6 and the Fed’s stat interchangeably.

Naive supply side economics fans and the heartless and often evil advocates of cutting the wealthy’s taxes as a means to kill the beast of New Deal and Great Society programs love to brag that the historically low recent unemployment numbers (April’s seasonally adjusted U-3 was 4.5 percent) are evidence that their tax policy scam truly does trickle down to those who are not tax cut direct material beneficiaries. Despite those wishing to give handouts to Gates and Buffett’s (who personally don’t even want the cuts) spin, the economy just isn’t that robust. The seasonably adjusted April U-6 numbers, which are a much more accurate economic suffering barometer than what the media regularly announces, increased to 8.2 percent.

Over the last decade, the U-6 numbers have ranged from an October 2000 Clinton administration low of 6.3 percent and a June 2003 10.6 percent Bush high.

Mainstream media covers neither, instead only focusing on the always rosier U-3 numbers. 1982 was when U-6 was last mentioned in The New York Times. I asked Times’ business editor Tom Redburn why the Gray Lady only lists the lower numbers and ignored U-6. He didn’t know what U-6 was and I had to describe what that BLS unemployment statistic measures.

Why doesn’t the so-called liberal media report these figures?

Even U-6 significantly underestimates the legions of the un and under employed..

U-6 counts part time workers asking people if they want fries, in their data. But what about people forced into these emergency jobs full time because they need the money to afford luxuries like food and shelter (Actually these jobs can not pay for shelter within 75 miles of New York City, even if no taxes are deducted and the entire paltry pay check is devoted to housing) despite earning much more in previous employment. How many cab drivers, wait staff and new Wal-Mart associates without health benefits fit this description?

U-6 also doesn’t include those who never actually enter the work force, despite being willing to almost kill for the types of jobs listed above, such as inner city youth, the physically and mildly mentally disabled.

U-6 also doesn’t track those I’ve dubbed Failed and Reluctant Entrepreneurs.

Failed Entrepreneurs started legitimate businesses that are no longer financially viable or never really succeeded. They continue to run businesses not producing sufficient income because of dismal job prospects.

Reluctant Entrepreneurs become self employed because they can not find work or need to mask actual unemployment from perspective employers who treat the jobless as if they have cooties when applying for work. They refer to themselves as employed to avoid the stigma associated with being out of work, despite lacking adequate income.

Reluctant Entrepreneurs commonly call themselves consultants, even when lacking paid clients. Others, who blog for free, introduce themselves as freelance writers. If they possess very basic web design skills and put up a friend’s no frills vanity site gratis, they may refer to themselves as web designers. Former teachers may list tutor as their occupation, even if they aren’t helping anyone with their homework or prepare for their SATS.

People working straight commission sales jobs without benefits such as Real Estate, Insurance and selling Amway are not part of the U-6 tabulation. Yes, there are people out there that earn millions in Real Estate and those who make adequate money selling insurance and a person eking out a living with some multi-level marketing scheme may exist. But most people fail at these and never earn even subsistence income from pure commission sales.

The majority of full time commission based salespeople (I’m not talking about the dabblers who are looking to merely supplement their day job income) accept this type of employment primarily because these positions are among the few jobs they can get, regardless of interest in these fields or sales aptitude. Those hiring Real Estate agents, insurance representatives and cosmetic and vitamin peddlers can afford to hire almost anyone because each new employee or more accurately contractor costs them relatively little to bring aboard. Straight commission sales people receive no base salary or draw (Regular compensation based on potential or future commissions. Theoretically, sales people who fail to earn enough in commissions to cover what is paid to them in draws can be asked to pay portions or all of their draws back. However, this is rarely enforced.), health insurance or paid days off. Potential commission sales people usually have to pay for their own licensing or initial merchandise inventory.

It wouldn’t be shocking if total national unemployment/underemployment would exceed 20 percent after emergency job workers, those who would like jobs but never entered the work force, Failed and Reluctant Entrepreneurs and straight commission salespeople are added to those counted in the U-6 data.

I discussed my hypothesis with a right wing friend of mine who regularly drinks the Kool-Aid mixed by NewsMax, talk radio and Fox News. I sited anecdotal evidence of all the officially and unofficially unemployed and underemployed people I know to support my assertion that our economy is broken. He tells me he doesn’t know anyone out of work.

My right wing friend started a business that still hasn’t turned the corner. For his sake, I hope it does soon, so he won’t potentially become a Failed Entrepreneur and join the unemployed and underemployed masses.