While the media and the Bureau of Labor Statistics continue to cite the “U-3” statistic to indicate the unemployment rate (currently 5.3%) the more accurate and realistic number is the BLS’s U-6 number, currently at 10.4%.
Of that percentage, an increasingly worrisome subset—those who have been unemployed for 27 weeks or more—increased from 2,121,000 in June to 2,180,000 in July. A seriously troubling indicator of an economy that continues to be in ill health is the record 93,770,000 Americans not participating in the workforce, a 38 year low point.
There is little indication that the situation is improving, since the U.S. economy continues to grow below levels necessary to improve the jobs picture. The Bureau of Economic Analysis (BEA) reports that “Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent (revised).
The BEA also announced on August 5 bad news in U.S. export numbers:
“[The] goods and services deficit was $43.8 billion in June, up $2.9 billion from $40.9 billion in May, revised. June exports were $188.6 billion, $0.1 billion less than May exports. June imports were $232.4 billion, $2.8 billion more than May imports.
“The June increase in the goods and services deficit reflected an increase in the goods deficit of $2.9 billion to $63.5 billion and a decrease in the services surplus of less than $0.1 billion to $19.7 billion.
“Year-to-date, the goods and services deficit increased $1.6 billion, or 0.6 percent, from the same period in 2014. Exports decreased $33.4 billion or 2.9 percent. Imports decreased $31.8 billion or 2.2 percent.
“Goods and Services Three-Month Moving Averages:
“The average goods and services deficit decreased $2.2 billion to $41.8 billion for the three months ending in June.
* Average exports of goods and services increased $0.2 billion to $189.1 billion in June.
* Average imports of goods and services decreased $2.1 billion to $230.9 billion in June.
Year-over-year, the average goods and services deficit decreased $1.1 billion from the three months ending in June 2014.
* Average exports of goods and services decreased $6.8 billion from June 2014.
* Average imports of goods and services decreased $7.9 billion from June 2014.”
The jobs crisis is particularly acute for recent graduates, reports the Economic Policy Institute , even using the Bureau of Labor Statistics’ less accurate U3:
- “For young college graduates, the unemployment rate is currently 7.2 percent (compared with 5.5 percent in 2007), and the underemployment rate is 14.9 percent (compared with 9.6 percent in 2007).
- “For young high school graduates, the unemployment rate is 19.5 percent (compared with 15.9 percent in 2007), and the underemployment rate is 37.0 percent (compared with 26.8 percent in 2007).
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- “The high share of unemployed and underemployed young college graduates and the share of employed young college graduates working in jobs that do not require a college degree underscore that the current unemployment crisis among young workers did notarise because today’s young adults lack the right education or skills. Rather, it stems from weak demand for goods and services, which makes it unnecessary for employers to significantly ramp up hiring.
EPI also reports:
- “Wages of young college and high school graduates are performing poorly—and are substantially lower today than in 2000. The real (inflation-adjusted) wages of young high school graduates are 5.5 percent lower today than in 2000, and the wages of young college graduates are 2.5 percent lower.
- “The cost of higher education has grown far more rapidly than median family income, leaving students with little choice but to take out loans which, upon graduating into a labor market with limited job opportunities, they may not have the funds to repay.
- “From the 1983–1984 enrollment year to the 2013–2014 enrollment year, the inflation-adjusted cost of a four-year education, including tuition, fees, and room and board, increased 125.7 percent for private school and 129.0 percent for public school (according to the College Board).
- “Between 2004 and 2014, there was a 92 percent increase in the number of student loan borrowers and a 74 percent increase in average student loan balances (according to the Federal Reserve Bank of New York).
- “Due to young college graduates’ limited job opportunities, stagnating wages, and the rising cost of higher education, college is becoming an increasingly difficult investment.”
The burden of severe levels of tuition-related debt makes the unemployment problem for college grads particularly troubling.