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Unemployment And Minimum Wage: What the Government Doesn’t Tell You
TruthisScary
The nominal unemployment rate for March remained steady at 6.7 percent (the same reading as February), according to the Bureau of Labor Statistics. Meanwhile President Barack Obama continues encouraging states to raise their minimum wage to $10.10 while Congress continues its perpetual stalemate on this and seemingly every other issue it undertakes.
Connecticut was the first state to oblige, passing legislation in March that will raise its minimum wage to $10.10 by January 1, 2017. Maryland will also raise its minimum wage to $10.10 by July 1, 2018. The delays, according to the respective state legislatures, are meant to give employers time to adjust their payroll solutions, change employee statuses accordingly or even reduce their work force as necessary.
While a 6.7 percent unemployment rate and a $10.10 minimum wage sound good for low-wage workers and those currently seeking employment, the truth isn’t near as rosy.
U3 vs. U6 Unemployment
When mainstream media and government officials talk about the unemployment rate, they are talking about the U3 unemployment rate. The BLS defines this number as “total unemployed, as a percentage of the civilian labor force.” You are considered part of the labor force if you are currently employed or have filled out a job application in the previous four weeks.
The labor force participation rate equals the number of people in the labor force divided by the total civilian population over age 16 (excluding prisoners, active duty military and institutionalized persons). The average labor force participation rate for 2013 was 63.2 percent, the lowest since 1978. The rate was 66.2 in January 2008, before the Great Recession hit. The current rate is also 63.2 percent.
In other words, the only reason U3 unemployment is going down is because the number of people who gave up looking for a job (known as disgruntled workers) has gone up. The U6 unemployment rate, which is also published by the BLS every month, is by far the more accurate measure. It takes into account those aforementioned disgruntled workers and those working part-time for whatever reason. The U6 was 12.7 percent for March (seasonally adjusted), which is down from the 13.8 percent in March 2013.
Technically, the unemployment rate has shown year-over-year improvement. But the 6.7 percent U3 sounds much better than the 12.7 percent U6, which is why the government chooses the previous as the “official” number.
Minimum Wage and Inflation
Let’s assume Maryland follows through with its new legislation and minimum wage in the state is $10.10 on July 1, 2018. For the sake of this article, we’ll consider the Consumer Price index (CPI) a legitimate measure of inflation. If minimum wage was $10.10 today, that same amount of money adjusted for inflation was only worth $9.26 in 2008, before the Recession kicked in, according to US Inflation Calculator. Ten years ago (2004), it was worth only $8.13.
The Federal Reserve Note (U.S. Dollar) has lost 96 percent of its value since its inception in 1913. It stands to reason that by 2018, $10.10 will not be $10.10. But apparently it’s the thought that counts.
Source: http://truthisscary.com/2014/04/unemployment-and-minimum-wage-what-the-government-doesnt-tell-you/
