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Wednesday, June 13, 2012

Add 400,000 More to the Unemployment Count


The official unemployment figures count the conventional number employed, those on involuntary part time, and discouraged workers. The official unemployment rate is 8.2%. If other categories are added, the unemployment rate rises by more than one percentage point.

Now we have another category: People who take early social security (and sacrifice higher pensions from later retirement) due to the fact that they cannot find jobs.

According to an analysis by Steve Goss, chief actuary for the Social Security Administration, about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession, and he said the trend most likely continued in 2011 and 2012, though that is harder to quantify. The most likely reason is joblessness. If we assume that as many people were forced into early retirement by unemployment in 2011 and 2012, the total number of “forced” early retirements would be 400,000.

If these forced retirements were added to the unemployment rate, it would rise by two tenths of one percent; namely, from 8.2 to 8.4 percent.

2 comments:

  1. I find a lot of similarity between the current problems (economy and Europe) and those during the early years of President Reagan's administration (Economy and USSR). However, the proposed solutions appear to be diverging from those that were applied in 1980s. For example, then, the Vice president took the initiative of identifying and getting rid of the undesirable regulations to improve the private sectors contribution to the economy. Conversely, now, more regulations are seen as the solution for reigning in the private sector.

    Those days, lower taxes and cutting (domestic) spending were also the main thrust of the Reagan Presidency to revive the economy. Then, the Soviet Union was the reason for a strategic defense build-up; although, the domestic share of spending was being reduced. This process on the net increase the deficit. Those days, Congressional leaders (Republican and Democrats) appeared to find higher taxes to be a necessary condition for reducing the deficit. But, the history indicate that the President stayed the course; although, he did 'compromised' when the outcome of cutting expenditures and raising taxes ensured a smaller government.
    See chapters 50-51 of "An American Life" by Ronald Reagan (1991).

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