If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent. [11]
Many people - including economists and financial reporters - say that unemployment is much lower than it was during the Great Depression. What they mean when they say that is that current U-3 figures in America are under 10%, while unemployment hit 25% during the Great Depression.
But most people forget that the worst unemployment numbers during the Great Depression did not occur until years after the initial 1929 crash . Specifically, unemployment did not hit 25% until at least 3 years after the start of the Depression. [12]
As of this writing (2009), we are only a year into the current economic crisis. Therefore, we have at least 2 more years to go until we hit the same period that unemployment peaked during the Great Depression.
Indeed, former Secretary of Labor Robert Reich wrote in April that the unemployment figures show that we are already in a depression. [13]
And
Chris Tilly - director of the Institute for Research on Labor and
Employment at UCLA - points out that some populations, such as
African-Americans and high school dropouts, have been hit much harder
than other populations, and that these groups are already experiencing
depression-level unemployment. [14]
Assuming that Williams and Roberts' calculations of unemployment are correct (using the same methods of measuring unemployment as were used during the Great Depression), then - as shown by the following charts - unemployment percentages may actually be worse than they were during a comparable period in the Great Depression:
[17]
We also know that, in terms of total numbers of unemployment people (as opposed to percentages), more people will be unemployed than during the Great Depression. [18]
What Are the Unemployment Trends?If unemployment is anywhere near as bad as during a comparable period during the Great Depression, the obvious question is where the trends are heading.
It is well known among economists that unemployment is a "lagging" indicator. [19] In other words, there is a lag time. When the economy hits a rough patch, the economic weakness will not show up in the unemployment numbers until several months or years later.
For example, as Europe's largest bank - RBS - warns:
Even if the economy starts to turn up the headwinds will be formidable," [the company's CEO] warned. "The green shoots are short in duration and you need to be cautious about interpreting them. Even if growth returns, unemployment will rise for some time afterwards ... [20]Because of the lag time between conditions in the economy and unemployment, we have to ask the following two questions in order to forecast future unemployment trends:
1) How bad were conditions in 2008 and early 2009?
