July Unemployment Report: Behind the numbers.

The U3 rate is up from 8.2% to 8.3%, U6 from 14.8% to 14.9%. In a burst of super-precision, the White House lets us know that U3 really rose from 8.217 to 8.254. (h/t Instapundit) Now, the unemployment figures are based on a survey, so I would submit that the data lacks the rigor to support three decimal places. That is what a former boss of mine referred to as “precisely inaccurate”.

I’ve been wanting to dig into some of the details, as I suspect things are worse than they appear for African-Americans. Things are bad enough, with the adult black male U3 rate at 14.1%, compared to the white male U3 rate of 6.9%. The rates are calculated using the non-institutionalized civilian population. This means that people in prison or jail are not counted as in the labor population.

And African-American adult males are incarcerated at about 6x the rate of white adult males. If we correct for that disparity, we would add roughly 700,000 adult males to the African-American labor force. And we can safely assume that they would all be unemployed (if the unincarcerated population has unemployment, it is unlikely that the incarcerated men have jobs waiting for them on the outside.) Let’s make the adjustments:

1. The civilian labor force goes to 8,970,000.
2. The unemployed population goes to 1,927,000. (I assume here that they would all be looking for jobs.)
3. The U3 rate would be 21.5%.

This is horrifying. I can’t adjust U6, as that rate is not reported by race. If we increase the adult black male U3 to U6 by the same ratio as the overall numbers (15.0/8.3), we get an inferred U6 rate of 38.8% for adult black males.

Bottom line: were it not for the disproportionate level of incarceration for adult male African-Americans, their reported rate of unemployment would be half again as large.


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