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Unemployed and Deployed in America

Economics / Unemployment Nov 29, 2013 - 01:10 PM GMT

By: Jeff_Berwick

Economics

Wendy McElroy writes: Unemployment will be a global tipping point in 2014, and America will tip as well. Europe is already panicking about the likelihood of young people rioting in the streets next summer. The 17-nation Eurozone is predicting severe riots due to soaring unemployment, especially among the young. In September, the Eurozone's general unemployment rate was 12.2%; the rate for young workers was 24.1%. According to the Organization for Economic Cooperation and Development, youth unemployment is nearly 60% in Greece, 55% in Spain and 40 percent in Italy and Portugal.


Last month, violence broke out between police and tens of thousands of protesters who marched in Rome against unemployment and austerity; the French held similar mass rallies last month as well. Greece and Spain seem to have been protesting for most of 2013.

America is widely touted as being the exception in unemployment. But, then, America lies unabashedly about its statistics.

The Bureau of Labor Statistics (BLS) compiles the United States' unemployment statistics every month. It looks at six categories of different data, that are called U-1 to U-6. U-3 counts how many people were unemployed but were actively looking for work during the past month; this is the official unemployment rate that is broadcast by the media. By contrast, U-6 counts the unemployed and underemployed who are excluded from the U-3 data. For example, U-6 classifies people who have unsuccessfully looked for a job in the last year as “not participating in the labor force” rather than as unemployed. U-6 also includes part-time workers who need more employment in order to live, but the number of these workers is dwarfed by the number of long-term unemployed. (“Long-term employment” is defined as lasting 27 weeks or more).

The data included in the categories increase as the numbers ascend; the categories are defined as follows:

  • U-3 Total unemployed, as a percent of the civilian labor force
  • U-4 Total unemployed plus discouraged workers
  • U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force
  • U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons

What is America's real unemployment rate? According to U-3 for October 2013, 11.3 million people were officially unemployed. BLS adds that 91,541,000 working age people did not participate in the labor force. If these numbers are added together, there are 102 million working age Americans who are either unemployed or not in the labor force for reasons that are not clear; for example, they could be retired. The non-working population represents 37.2% of working age people.

(Note: it is not known how the federal furlough of employees during the October shutdown affected the data, if at all. The furloughed employees seem to have been counted as both unemployed and working because they eventually received full payment for the time off.)

The unemployment rate reflected by the last four categories of BLS data break down as follows:

  • U-3 = 7.3%
  • U-4 = 7.8%
  • U-5 = 8.6%
  • U-6 = 13.8%

The American media used the U-3 numbers and reported the unemployment rate for October to be 7.3%, which is about 1/2 of the more realistic U-6 total. The media also glossed over U-3 figures that were alarming. For example, the official rate for teen unemployment (16 to 19 years old) stood at 22.2%; black unemployment is 13.1%

And, then, there were the outright media lies. For example, the New York Times reported on November 17, “[T] he economy is improving, if slowly. Employers are now adding jobs at a pace of around 200,000 a month, and the unemployment rate has dropped to to 7.3 percent.” [Emphasis added.] Actually, the September rate was 7.2%, making the October rate an increase in unemployment, not a drop. But the NYT could not claim “the economy is improving” without data that reflected improvement.

One aspect of the BLS data is particularly alarming. In the month of October alone, 923,000 new people became “non-participants” in the labor force. Given the job killing impact of Obamacare, it is reasonable to assume that the rate of growth for non-participants will hold steady in the foreseeable future. If so, then, by 2017, there will be more working age people who are not in the workforce than there are ones holding jobs in America.

Other factors make American unemployment more explosive. For example, an estimated 1.3 million long-term unemployed workers are scheduled to lose unemployment benefits by the end of the year unless Congress authorizes an extension. An additional 850,000 could lose benefits in the first quarter of 2014. House and Senate Democrats have already introduced two bills to renew the federal program through 2014. It is doubtful that the bills will pass before Congress adjourns. It is doubtful that Republicans and Democrats will cooperate on a budget.

A mass of idle and discontented youths is a formula for social unrest. Indeed, high youth unemployment rates have been a driving factor in protest movements around the world, including the Arab Spring. There is no reason to believe that America will be spared the similar sight of protests, riots, street violence and the inevitable backlash by police. 

Controlling civilians on its own soil is why the American police became militarized, in the first place. Arguably, a 1960s police unit in Delano, California was the first “high-risk team” that resembled the modern SWAT operation. The unit was organized as a specific response to the non-violent farm worker activism of the United Farm Workers led by Cesar Chavez. The police supported the growers and acted against the strikers in a manner that the courts found to be unconstitutional.

Perhaps the most path-breaking SWAT was established in Los Angeles in 1967 by Inspector Daryl Gates, who later became chief of police. Formed as a response to the Watts riots, the SWAT unit was inextricably tangled in the control of social and political dissent. The first high-profile use of the Los Angeles SWAT team was in December 1969 when the police attempted to serve search warrants on the Black Panthers headquarters. A four-hour gun battle ensued.

The militarization of law enforcement on every level has increased dramatically since the 1960s. Police departments are prepared to treat fellow Americans who protest as enemy combatants. [Editor's Note: Have you prepared accordingly yet? The violent results of this militarization will be much better to watch from a safe distance. Click here to find out more about a great place to be while the US descends into riots and extreme police responses.]

CONCLUSION

The media and politicians cannot successfully lie to people about the food they can afford to put in their children's mouths. This is something people notice. Unemployment is a reality to which they wake up every morning. And, yet the media shakes its head in amazed confusion and asks, “Why is the recovery jobless?” The unemployed know the answer: because there is no recovery. What passes for progress – the rise of the stock market, for example – only reflects the quantitative easing that is skewing all economic data. What is real is what happens every time the state enters an industry or field of endeavor: stagnation.

It could be a long, hot summer.

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.

© 2013 Copyright Jeff Berwick - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeff Berwick Archive

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