In Depression Terms, Jobless Rate At 16.5%
There seems to be a lot of resistance to the idea of a stimulus package because the employment numbers aren’t nearly as bad as those during The Great Depression.
But you have to look at the numbers in a historical context if you want to understand the entire story.
Figures collected for Reuters by John Williams, from the electronic newsletter Shadowstats.com, suggest that, while we are not there yet, the comparison is not as outlandish as it might initially seem.
By his count, if unemployment were still tallied the way it was in the 1930s, today’s jobless rate would be closer to 16.5 percent — more than double the stated rate.
“I expect that unemployment in the current downturn, which will be particularly deep and protracted, eventually will rival, if not top, the 25 percent seen in the Great Depression,” Williams said.
He and other critics have one particular sticking point with the current way of measuring unemployment: the treatment of discouraged workers.
Under President Lyndon Johnson, the government decided individuals who had stopped looking for work for more than a year were no longer part of the labor force. This dramatically decreased the jobless rate reported by the government.
“Both part-time workers wanting full-time work and discouraged workers tend to make the unemployment rate lower than it would otherwise be,” says Robert Schenk, professor of economics at St. Joseph’s College, Indiana.
So this is why we have to look at the current situation with extra scrutiny. Because the numbers have essentially been gamed for the past 40 years and that has to be considered.
There’s no doubt that employment numbers were worse than we thought during times of prosperity, but now we’re in a particularly difficult situation and so the numbers during the Depression need to be recognized and compared to provide a more accurate assessment of this ongoing predicament.