The Bleak Outlook For Unemployment
According to the Bureau of Labor Statistics, the current official unemployment rate is 10%. The official unemployment rate, often referred to as the U-3 rate, represents the total unemployed as a percentage of the civilian labor force.
However, the statistic does not include all Americans that are currently unemployed. For example, the statistic that we, at Hennion & Walsh, often look to for a broad assessment of the employment picture in the United States is the U-6 rate which measures the total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. At present the U-6 rate stands at 17.5%, which according to Jeff Cox of CNBC.com in a Nov, 19, 2009 article entitled, “The ‘Real Jobless Rate: 17.5% of Workers are Unemployed,” is the highest this rate has been since becoming an official labor statistic in 1994.
Hence, the question becomes where will all of the new jobs come from to put America back to work again? As this question is pondered, one should remember that America is no longer defined by its manufacturing prowess. Rather, the U.S. economy is now more of a service oriented economy driven on the heels of innovation. As a result, we will not be able to depend on a surge in manufacturing jobs that historically have accompanied economic recoveries. New jobs will likely just be recycled finance industry jobs or completely new jobs resulting from innovative companies focusing on developing areas such as alternative energy. Regardless, we do not expect to see a significant dent made into unemployment in 2010 and it may take several years and a major shift in the global economy to get America back to full employment – which many academics believes lies somewhere between a U-3 unemployment rate of 3% and 4%.