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How Many Americans Really Want Jobs?

Mar 4 2011

Excerpted from The Atlantic:

This morning, we learned that the economy added 192,000 jobs as the unemployment rate ticked
down to 8.9%. That put the number of unemployed Americans at 13.7 million -- but this doesn't
tell the entire story. This number does not take into account Americans who, for various reasons,
are not considered in the labor force. Some of them still want jobs right now, even by the Bureau
of Labor Statistics'' standards. What would the picture look llike if we include
clude these Americans?
For starters, how many were there? In February, BLS estimates 6.4 million Americans want jobs
now, but are not considered part of the workforce. They are not included in the tally of
unemployed Americans.
If you add these additionall workers into the number of unemployed, you find that just over 20
million Americans want a job right now, but do not have one. That's obviously a much grimmer
picture than the 13.7 million that the headline number suggests -- it's nearly 50% higher.
Thiss new calculation of Americans who want a job also shows a much larger portion of the
nation struggling to find work, compared to the 8.9% unemployment rate. The portion of
Americans who want a job was 12.6% in February.
Some charts will help us better un
understand
derstand how the trend for the number of Americans who want
a job has changed. First, here's the number of Americans who are not in the labor force, but want
a job now, since 2007.

Please note the charts on the following pages…

There are reasons for greatly heightened inflation concerns *specificall

*specifically*
y* given the
unemployment problems we currently face, and despite the true lack of domestic demand for
much of everything. Please reach out to us for details on portfolio construction in this
environment.

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It's pretty easy to see how this number has grown. Since January 2007, it's up by 1.9 million. It's
also worth noting that this number hasn't declined much since jobs began growing last year. In
fact, it remains higher than it was a year earlier, despite ticking down a bit in January.
Next, let's
's look at the total number of Americans who want a job including those not in the labor
force and those considered technically unemployed by BLS:

This is a pretty interesting chart, because it shows the total number of Americans who want a job
has declined, but not very dramatically.

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And here's another chart, this time showing a re

re-calculated
calculated rate of unemployment, consisting of
the portion of Americans who want a job, whether technically considered in the labor force or
not. The headline unemployment rate is included for comparison:

Again, you can see that the reported unemployment rate has been declining slightly faster than
the alternative measure that includes all Americans who w
want a job.
If you assume that BLS has good statistical estimation methods, then this broader measure of
Americans who want a job should include the all of them -- even those who are discouraged,
have seen their unemployment insurance run out, or are other
otherwise
wise jobless but want to work. It
does not, however, include Americans that are forced to work part time because they cannot find
full-time
time work. That would likely add several million more Americans to the grand total of
underemployed people, though they w would not truly be unemployed.

Shawn A. Mesaros
Pacific Asset Management
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