Hundreds of people lined up for a job fair in MiamiRaghavan Mayur, president at TechnoMetrica Market Intelligence, follows unemployment data closely. So, when his survey for May revealed that 28% of the 1,000-odd households surveyed reported that at least one member was looking for a full-time job, he was flummoxed.

"Our numbers are always very accurate, so I was surprised at the discrepancy with the government's numbers," says Mayur, whose firm owns the TIPP polling unit, a polling partner for Investors' Business Daily and Christian Science Monitor. After all, the headline number shows the U.S. unemployment rate today is 9.5%, with a total of 14.6 million jobless people.

However, Mayur's polls continued to find much worse figures. The June poll turned up 27.8% of households with at least one member who's unemployed and looking for a job, while the latest poll conducted in the second week of July showed 28.6% in that situation. That translates to an unemployment rate of over 22%, says Mayur, who has started questioning the accuracy of the Labor Department's jobless numbers.

Even Austan Goolsbee Has Been Skeptical

Mayur isn't alone in harboring such doubts, nor is he the first to wonder about inaccuracies. For years, many economists have pointed to evidence that the government data undercounts the unemployed. Economist Helen Ginsburg, co-founder of advocacy group National Jobs For All Coalition, and John Williams of the newsletter Shadow Government Statistics have been questioning these numbers for years.

In fact, Austan Goolsbee, who is now part of the White House Council of Economic Advisers, wrote in a 2003 New York Times piece titled "The Unemployment Myth," that the government had "cooked the books" by not correctly counting all the people it should, thereby keeping the unemployment rate artificially low. At the time, Goolsbee was a professor at the University of Chicago. When asked whether Goolsbee still believes the government undercounts unemployment, a White House spokeswoman said Goolsbee wasn't available to comment.

Such undercounting of unemployment can be an enormously dangerous exercise today. It could lead to some lawmakers underestimate the gravity of the labor market's problems and base their policymaking on a far-less-grim picture than actually exists. Economically, and socially, that would make a bad situation much worse for America.

"The implications of such undercounting is that policymakers aren't going to be thinking as big as they should be," says Ginsburg, also a professor emeritus of economics at Brooklyn College. "It also means that [consumer] demand is not going to be there, because the income from people who are employed isn't going to be there."

Indeed, it will add additional stress to an already strained economy. Businesses that might start ramping up after seeing the jobless number drop could set themselves up for disappointment when customers don't appear or orders don't flow in.

College Grads Serving Fries

Plus, having a job today is quite different from what it was just a few years ago: Many Americans have had their hours cut and are working for less pay. A Pew Research survey found more than half of all adults in the labor force had either lost a job or suffered a reduction in income because of the recession.

Ginsburg says the biggest source of undercounting comes from people who can't find a full-time job that they're qualified to do, for instance recent college graduates who take part-time jobs at fast-food joints or retail stores. Today, the Labor Department estimates that 8.6 million people are in this category.

The federal government counts such people as employed. However, polls show that these folks actually consider themselves "unemployed" and "looking for a job," and probably accounted for a large chunk of TechnoMetrica's respondents.

Jobless Workers Who Disappear

Another major source of undercounting is the unemployed who've given up looking for jobs. The Bureau of Labor Statistics headline number counts as unemployed only people who have actively looked for a job in the previous four weeks. About 2.6 million people had pursued jobs in the past 12 months but, discouraged by the lack of opportunity, had stopped looking altogether.

"Isn't it interesting that if you stopped looking for a job, you evaporate as a jobless person and are just not counted," says Gerald Celente, director of Trends Research Institute in Kingston, N.Y. Celente believes this kind of undercounting has suited the government politically. "It's what government does: Downplay disasters and amplify success."

According to the Pew Research Center, a large number of people are out of jobs for a longer period during this economic downturn. The typical unemployed worker today has been out of work for nearly six months. That's almost double the previous post-World War II peak for this measure, which was 12.3 weeks in 1982-83.

Indeed, if all of the truly unemployed were counted, the rate would be significantly higher. The BLS, in a data point titled "U-6," says it counted the total unemployment rate in June at 16.5%.

Misreading Americans' Anxiety

However, John Williams, founder of Shadow Government Statistics, says when accounting for the long-term unemployed, the jobless rate runs up to as much as 22% currently. Williams's newsletter, which analyzes flaws in government economic data, points out that such a rate isn't that far from the 25% it hit during the Great Depression.

Both Celente and Ginsburg believe lawmakers' not-dire-enough view of unemployment is one reason why they didn't extend federal unemployment benefits. Of course, party politics is another deterrent. Ginsburg says the Administration's decision to tackle the health care reform over unemployment reflects its lack of priority.

By taking his eye off one of the most fundamental issues affecting the country, President Obama has seen his popularity sink. The most recent Public Policy Polling survey says 45% of voters approve of the job he's doing, while 52% disapprove -- the first time Obama's disapproval ratings have exceeded 50% in this survey.

It's obvious that Americans view unemployment more urgently than either lawmakers or the president. And if pollsters like Mayur or economists like Ginsburg and Williams are right, it will take longer to fix this hole because it's already bigger than Washington thinks.

Editor's Note:
This is the first part of "The Jobless Effect" series. Also see:

"Unemployment Is Fueling Independent Voters' Anger"

"Illegal Immigration and Unemployment: A Toxic Mix"

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June Ja

Many companies have a unique service or product, but it lacks both the capital or know-how to go public. Going public slams open the doors to massive global capital possibilities and massive partnering and strategic growth capabilities. A financial company has broken should never attempt to go public to raise money to stay afloat, because you only get tax advisors based predators, their money is based on paid services

August 23 2011 at 6:51 PM Report abuse rate up rate down Reply
June Ja

Seriously, sometimes I have to take a step back and laugh when I try the owners of the company, see Pre-qualification consulting firm to public. I just stand there and scratch my head in disbelief when they think they are asking all the 'right' questions when all they are doing is setting themselves up for failure.

August 23 2011 at 6:48 PM Report abuse rate up rate down Reply

Please stop telling us this is a recession and call it what it is. Another depression with some aid. I would be out on the street without the unemployment extensions. I am a 99er. My husband is taking a part time minimum wage job since his benefits ran out and collecting early social security. Please read my blog. We are making the only choices available to us.

February 09 2011 at 4:54 PM Report abuse rate up rate down Reply

Please stop telling us this is a recession and call it what it is. Another depression with some aid. I would be out on the street without the unemployment extensions. I am a 99er. My husband is taking a part time minimum wage job since his benefits ran out and collecting early social security. Please read my blog. We are making the only choices available to us.

February 09 2011 at 4:51 PM Report abuse rate up rate down Reply

The other downside of under-reporting has to do with the tax add or tax subtract portion of the nation's financial equation. Too few people are rowing and too many people are weighing down the boat.

If 22% of people are underemployed but only 9.5% are currently getting help--what's going to happen in 3 months or 6 months or a year, when these people run out of savings or the ability to borrow?

But what's most sad is the way the Congress and Administration looks at jobs? It's as if they feel like it's a fish handout versus the provision of a pond teeming with fish. Jobs exist when profits are possible--when the result is unlikely, why would anyone create the job?

This isn't rocket science!!!

August 11 2010 at 12:52 PM Report abuse rate up rate down Reply
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