Unemployment During the Great Depression Has Been Overstated and Current Unemployment Understated (We’ve Now Got Depression-Level Unemployment)

Email Print
FacebookTwitterShare

The commonly-accepted unemployment figures for the Great Depression are overstated.

Specifically, government workers were counted as unemployed by Stanley Lebergott (the BLS economist who put together the most widely used numbers) … even though gainfully employed and receiving a pay check.

If we’re trying to compare current unemployment figures with the Great Depression, the calculations of economists such as Michael Darby are more accurate.

Here is a comparison of Lebergott and Darby’s unemployment figures:

Year Lebergott Darby 1929 3.2% 3.2% 1930 8.7% 8.7% 1931 15.9% 15.3% 1932 23.6% 22.9% 1933 24.9% 20.6% 1934 21.7% 16.0% 1935 20.1% 14.2% 1936 16.9% 9.9% 1937 14.3% 9.1% 1938 19.0% 12.5% 1939 17.2% 11.3% 1940 14.6% 9.5%

(see Robert A. Margo’s Employment and Unemployment in the 1930s.)

We’ve Got Depression-Level Unemployment

Unemployment is currently underreported. Even government officials admit that their "adjustments" to unemployment figures are inaccurate during recessions.

In addition, the most widely-cited statistics use the Department of Labor’s Bureau of Labor Statistics’ "U-3" methodology. But "U-6" figures are more accurate, because they include people who would like full-time work, but can only find part-time work, or people who have given up looking for work altogether. U-6 is also is closer to the way unemployment was measured during the Great Depression than U-3

Current levels of unemployment are Depression-level numbers, especially when compared to Darby’s figures.

For example, economist John Williams puts current U-6 unemployment at 15.9%. That’s higher than 9 out of 12 years charted by Darby.

And there are certainly Depression-level statistics in some states. For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:

  • California: 22.0
  • Nevada: 23.7
  • Michigan 20.3
  • (and Los Angeles County has 24.1% unemployment, higher than any of the Depression years as reported by Darby)

Williams puts SGS unemployment – which he claims is the most accurate measure – at 22.3%. That’s higher than 11 out of 12 years charted by Darby.

Youngstown State University’s Center for Working Class Studies puts the "De Facto Unemployment Rate" at 28.76%. I’m not sure if that compares to methods used during the Great Depression, but it surpasses all 12 out of 12 years charted by Darby.

More People Are Unemployed than During the Great Depression

As I noted in January 2009:

In 1930, there were 123 million Americans. At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 people, were unemployed.

Will unemployment reach 25% during this current crisis?

I don’t know. But the number of people unemployed will be higher than during the Depression.

Specifically, there are currently some 300 million Americans, 154.4 million of whom are in the work force.

Unemployment is expected to exceed 10% by many economists, and Obama "has warned that the unemployment rate will explode to at least 10% in 2009".

10 percent of 154 million is 15 million people out of work – more than during the Great Depression.

Given that the broader U-6 measure of unemployment is currently around 17% (ShadowStats.com puts the figure at 22%, and some put it even higher), the current numbers are that much worse.

Read the rest of the article

Email Print
FacebookTwitterShare
  • LRC Blog

  • LRC Podcasts