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John Williams Sees Unemployment at 22%

Posted by Larry Doyle on January 8, 2010 3:15 PM |

What is the real rate of unemployment?

The traditional rate of unemployment, commonly regarded as the U-3, is currently 10%.

Very often, though, we hear reference to the underemployment rate, that is the U-6 rate. The U-6 rate currently sits at 17.3%. This measure encompasses those individuals who desire more hours, are working below their skill set, or are discouraged and have exited the labor pool.

Thanks to SG, I was introduced today to a noted economist who has been tracking an even more encompassing measure of unemployment. Who is this individual? John Williams who operates Shadow Government Statistics.

Walter J. “John” Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth’s Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.

Williams has developed an even more comprehensive measure of unemployment, known as the SGS Alternate. What does this include?

The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

Alternate Unemployment Chart

Not exactly a pretty picture when we incorporate all the short-term and long-term components. An unemployment rate of 22% is eerily reminiscent of the 1930s.


  • TeakWoodKikte

    That number describes California just about right.

  • coe

    It strikes me that there is absolutely nothing more debilitating to the psyche than the helplessness of unemployment…whether one is a single working mom, the father of a family of six, a newly graduated student, a veteran on the back nine, it really doesn’t matter – employment directly speaks to a sense of accomplishment, self-worth, and daily human commerce. It clearly is a key component to self, family, and society as a whole – and, though things in my opinion have dramatically changed for the worse, to some, gainful employment still preserves the commitment to a company ethos and shared vision and common passion. As technology has improved and we have raced to become more of a service economy than one that actually produces real stuff, somehow we have failed to incorporate the new groundrules into our schools, our political debate, and our business vision. It seems to happen everyday – companies underperform; the CEO (who happens to be raking in a comp package that is 400X that of the average employee) announces that he will “right-size” (where is the courage to use the word “FIRE”?) the firm by 4,000 or 20% or by shedding divisions – some such metric; the shareholders politely applaud this bold “vision”; the business media (on 24/7 overdrive with “commentators” who have become rock stars in their own right) parse the numbers and declare victory…and all the time, legions of bedraggled and forlorn folks pack moving boxes with some sentimental trinkets and wonder just how on God’s earth this happened to them, and what can they possibly do to survive. I say shame on the Boards, the Executives, the Shareholders, and the politicians – everyone needs to work a lot harder to solve this problem…22% shadow unemployment may prove to be the seeds of civil unrest, and the social service costs are simply atmospherically staggering…I was listening to some old music with a friend, who, by the way, has been “down-sized” and out of work for 13 mos, despite terrific academic credentials, enormously effective experience, and flexible skills…the song that was playing was “We’re Going Wrong” by Cream…indeed!

    • Larry Doyle


      Well put. The American psyche is taking a hit like never before. This ht is not merely a function of developments of the last year or two. To think so would be playing into the hand that the establishment would like us to believe.

      Somewhere along the way we have lost a large part of our moral fiber. That loss is being felt in every corner of our society…..said without trying to be overly moralistic.

      Thanks as always for adding real depth to the conversation.

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