Saturday, February 7, 2015

SGS Alternate Unemployment Rate (the measurement you rarely see)

The headline unemployment rate is the U3 measurement which current stands at 5.7%. U3 is argued by many as a political unemployment rate in that the measurement has become an unreliable measurement due to arbitrary adjustments. (1)

U6, also known as the real unemployment rate, stands at 12%. Many people suggest that U6 is a better measurement of unemployment as it includes short-term discouraged workers, marginally-attached workers, and those workers which work part-time as full-time employment is unavailable. (2)

Enter the SGS Alternate Unemployment Rate which adds in the long-term discouraged worker. When measuring SGS one finds a measured rate of roughly 23.2%. (3)

Why do you rarely, if ever, see the SGS Alternate Unemployment Rate published? SGS was published for years by the Bureau of Labor Statistics (BLS). However, the SGS rate was a political thorn in the side of belt way politicos. Hence in 1994 politicos ended the publication of SGS by the BLS.

Enter the private sector. The SGS calculation finds its basis in the monthly Employment Situation Report published by the BLS. Meaning, politicos can run but can’t hide as private concerns can easily calculate SGS and then publish the SGS rate privately.