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Source:
http://www.nypost.com/business/36264.htm

THE U.S. UNEMPLOYMENT NUMBERS ARE A LIE
By JOHN CRUDELE

July 31, 2001 -- HOW can this country's unemployment rate be so low
when so many people are being laid off?

The answer: smoke, mirrors - and laziness on the part of the media.

The unemployment rate in the U.S. should really be about 5.2 percent
right now, a lot worse than what Washington will probably claim on Friday.

That view was reinforced last Friday when Washington reported the worst
economic conditions in nearly a decade. That higher unemployment number is
what you get when you make a guesstimate based on the huge number of people
who are now going into their state unemployment offices and asking for
benefits.

There are a lot of different ways to come up with any economic stat. But
the federal jobless numbers have been remarkably low considering how many
hundreds of companies have announced huge layoffs in the last few months.

Just last week, for instance, Hewlett-Packard, JDS Uniphase, Reuters and
Lucent announced that thousands of workers would soon be let go. Those
announcements are part of a steady stream of cost-cutting measures that
have workers across the country quaking.

But you don't get that sense of bloodshed from Washington's numbers.
While the unemployment rate has risen from 3.9 percent to 4.5 percent in
recent months, the kind of job cuts we are seeing probably translates to an
unemployment rate that is 0.7 percent higher than what the government is
saying.

That means millions of unemployed workers are not being acknowledged by
the government. Here are some numbers.

So far this year, for instance, companies have announced that 777,000
workers were being let go. That's triple the layoffs at this time last
year. And the downsizing is much greater than happened during the 1991
recession, according to John Challenger, whose firm - Challenger, Gray &
Christmas - monitors the job market.

The current unemployment rate, says Challenger, "certainly doesn't
reflect the heavy, heavy downsizing we've seen."

On Friday the U.S. Labor Department will announce the job figures for
July. Experts believe that the government will disclose that more jobs were
lost to the recession in July and that the unemployment rate either stayed
put at 4.5 percent or inched up by one-tenth of a percentage point.

At that rate, there is no way the federal government's numbers will ever
catch up to where they should be.

John Vail, an economist with Fuji Futures Inc. in Chicago, tells me that
this year there has been a 42 percent increase in the number of people
collecting unemployment insurance from the states. "That's solid data, from
the states," says Vail, who, like some of us, thinks the federal numbers
are vastly understating the unemployment problem.

"That indicates that unemployment is rising much more rapidly than what
is shown in the federal monthly report which is based on surveys and
estimates," says Vail.

I've said in this column before - and others, including The New York
Times, are now repeating it - that the unemployment rate in this country
would be closer to 10 percent if people who have given up looking for a job
were counted.

But even if you don't include those "discouraged workers," as Washington
calls them, the situation is probably as bad as you think from anecdotal
evidence.

Vail calculates that the unemployment rate should be at 5.2 percent.
Other people who are using a totally different set of numbers agree with
that calculation.

* Please send e-mail to: jcrudele@nypost.com