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Ignore the Unemployment Rate (One of the most misleading numbers shaping our economy)
Wall Street Journal ^ | 02/07/2014 | By Zachary Karabell

Posted on 02/07/2014 8:57:58 AM PST by SeekAndFind

The unemployment rate is one of the most consequential numbers shaping our body politic. Unfortunately, it is also one of the most misleading.

Today at 8:30 a.m., the U.S. Bureau of Labor Statistics released its monthly employment report, as it does at the start of every month. As usual, the announcement was widely covered in the financial and mainstream media—a convenient hook for commentary about the state of the economy, the arc of the recovery and the future of the U.S.

The unemployment rate was a central factor in the 2012 presidential election, with President Barack Obama seemingly defying a powerful historical trend and winning re-election while the rate hovered at 8%. It was used to justify the nearly $800 billion stimulus bill in 2009. And the rate has remained in the spotlight through the early weeks of 2014, as the 1.3 million Americans receiving long-term unemployment benefits have become a source of political theater and ideological debate.

The unemployment rate, in short, is one of the most consequential numbers shaping our body politic. Unfortunately, it is also one of the most misleading.

It isn’t just that the number is a statistical artifact, involving substantial estimation and frequent adjustments. Nor is it because the unemployment report as a whole combines two rather different surveys—one of 557,000 businesses and their payrolls, another of 60,000 households—each of which sheds a different light on the jobs picture.

The real problem is that the number, originally designed for limited purposes, has come to assume totemic status. Focusing so single-mindedly on this one employment figure has made it impossible to have a cogent discussion of labor in the U.S. and to design meaningful responses to our varied economic problems.

(Excerpt) Read more at stream.wsj.com ...


TOPICS: Business/Economy; Culture/Society; Front Page News; Government; News/Current Events
KEYWORDS: jobs; unemployment; unemploymentrate

1 posted on 02/07/2014 8:57:58 AM PST by SeekAndFind
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To: SeekAndFind
Liberals believe they can solve all the world's ills and unemployment is one of them. They so misunderstand business, they truly think 100% employment can be achieved. Yeah, in a communist or fascist controlled nation where they decide where you work...
2 posted on 02/07/2014 9:06:58 AM PST by jeffc (The U.S. media are our enemy)
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To: SeekAndFind

I’ve seen figures that put the real unemployment rate at 30-40%.


3 posted on 02/07/2014 9:08:05 AM PST by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: SeekAndFind

Five years of misleading and counting.


4 posted on 02/07/2014 9:13:02 AM PST by Vaduz
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To: OneWingedShark
I’ve seen figures that put the real unemployment rate at 30-40%.

In the faculty lounge version when no one is working but no one is looking for work there is NO unemployment. These morons are a cancer on America.

5 posted on 02/07/2014 9:16:21 AM PST by Don Corleone ("Oil the gun..eat the cannoli. Take it to the Mattress.")
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To: OneWingedShark

All depends on the meaning of word “UNemployment”....BJC

Yes, the number is a joke. They count only those receiving unemployment and those actively seeking jobs by registering with state agencies. On top of that they superimpose birth/death data to further massage the number.

The only correct number can be found by looking at how many are paying social security tax, because every single soul who has a job or a business must pay that tax. But that would be too much transparency and too much embarrassment so the gov’t won’t tell us.


6 posted on 02/07/2014 9:17:22 AM PST by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: SeekAndFind

This is a bit like a NFL coach complaining about his offense being unable to score in the Red Zone, but pointing to all the yardage that they are racking up between the 20 yard lines.

It’s (the UE numbers) the system we have. It could be improved. We should stop ‘fudging’ the numbers. But there has to be a yardstick of sorts.


7 posted on 02/07/2014 9:20:30 AM PST by Tallguy
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To: SeekAndFind

Repeal and Replace?


8 posted on 02/07/2014 9:22:36 AM PST by ex-snook (God is Love)
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To: OneWingedShark
I’ve seen figures that put the real unemployment rate at 30-40%.

At this point what difference does it make? I have been told repeatedly by some members of this forum that the only reason people are unemployed is because they are lazy leech's who would rather sit home sucking off the government. I however am charitable about those forum members and just consider them ignorant with their broad brush strokes and generalities.

9 posted on 02/07/2014 9:26:26 AM PST by Mastador1 (I'll take a bad dog over a good politician any day!)
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To: entropy12

RE: On top of that they superimpose birth/death data to further massage the number.

Can you or someone please enlighten me on what this birth/death data is? I keep reading about it but don’t understand what it means... I know it is an estimate, but what is it an estimate of and why can’t we count on it?

Thanks.


10 posted on 02/07/2014 9:28:39 AM PST by SeekAndFind
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To: Mastador1

RE: I have been told repeatedly by some members of this forum that the only reason people are unemployed is because they are lazy leech’s who would rather sit home sucking off the government.

I for one know of many people who are SINCERELY and ACTIVELY looking for work, taking anything they can get ( even part time or contract positions ).

The real problem is -— THERE ARE NOT MANY JOBS AVAILABLE OUT THERE. I can speak for those in our tri-state area — NY-NJ-CT.

For every one job open, I would say there are at least 10 candidates applying for it.


11 posted on 02/07/2014 9:30:57 AM PST by SeekAndFind
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To: Mastador1
>> I’ve seen figures that put the real unemployment rate at 30-40%.
>
> At this point what difference does it make?

Well, when a lot of people have nothing left to lose it makes a lot of government assumptions invalid. (i.e. their estimates of how much people will tolerate the intolerable become increasingly erratic in their accuracy.)

If people have no jobs, this means that realistically speaking they have no income --granted that debt eases that crush-- and desperate people can do amazing things.
If the thought that the reason they don't have jobs is because of the oppression of the government, it could cause a lot of angry action; after all, our leaders are becoming more and more a let them eat cake sort.

12 posted on 02/07/2014 9:39:26 AM PST by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: SeekAndFind

The key to fixing America’s economic problems is to end all statistical measurements of the economy. Those “facts” then create new “problems” needing government intervention which politicians are too happy to provide.

End the information and liberate the economy.


13 posted on 02/07/2014 9:42:19 AM PST by 1010RD (First, Do No Harm)
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To: SeekAndFind

Clearly this administration does not want US citizens knowing just how effed the economy is so they propagandize the employment figures. Two other very critical portions on part of economic reporting, this administration does not include the cost of food and fuel in it’s cost of living reported figures. Maybe at some point they will tell us that water isn’t wet.


14 posted on 02/07/2014 9:42:56 AM PST by drypowder
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To: SeekAndFind
For every one job open, I would say there are at least 10 candidates applying for it.

If only! I have been involved in one testing situation where I was testing against over seven hundred other applicants for ONE position, and that was just the testing phase prior to their deciding who to actually interview. On average the number of people I have been competing against for a job has been over a hundred and never less than fifty, and once again thats after the initial qualification weed out to go to the testing weed out prior to interview.

15 posted on 02/07/2014 9:46:29 AM PST by Mastador1 (I'll take a bad dog over a good politician any day!)
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To: Mastador1
RE: If only! I have been involved in one testing situation where I was testing against over seven hundred other applicants for ONE position, and that was just the testing phase prior to their deciding who to actually interview.

Are you sure they're not competing for American Idol? ( HA HA )


16 posted on 02/07/2014 9:48:09 AM PST by SeekAndFind
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To: SeekAndFind

Ping for later


17 posted on 02/07/2014 9:57:44 AM PST by 11th Commandment (http://www.thirty-thousand.org/)
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To: SeekAndFind
The real problem is that the number, originally designed for limited purposes, has come to assume totemic status. Focusing so single-mindedly on this one employment figure has made it impossible to have a cogent discussion of labor in the U.S. and to design meaningful responses to our varied economic problems.

An even bigger problem is that the official unemployment rate is a big underestimate. Everyone acknowledges that it doesn't count those who have given up looking for jobs, but it also fails to account for the vast number of underemployed: skilled workers and even professionals who are stuck in dead-end, near minimum wage (and often part-time) jobs in retail or elsewhere in the unskilled service sector. A "recovery" where people with skills work at Wal-Mart isn't much of a recovery.

18 posted on 02/07/2014 10:17:00 AM PST by ek_hornbeck
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To: entropy12
They count only those receiving unemployment and those actively seeking jobs by registering with state agencies.

Seriously, where did you learn the above? I'd like to have the entire Economics department at George Mason contact them directly. Sheesh.

19 posted on 02/07/2014 10:36:00 AM PST by 1rudeboy
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To: entropy12
"They count only those receiving unemployment and those actively seeking jobs by registering with state agencies."

No, that is only part of the way they go about it. They also survey businesses.

20 posted on 02/07/2014 10:38:02 AM PST by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: jeffc

Well wait for it. It’s clear we are working our way down to full employment——the Kenyan will tell us when we get there. Just a few million more layoffs ought to do it?


21 posted on 02/07/2014 11:05:25 AM PST by cherokee1 (skip the names---just kick the buttz)
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To: SeekAndFind

Our local news reported that unemployment is under seven percent, though one may drive around and see 20-30 percent of office, retail, and industrial space empty, for sale, or lease.


22 posted on 02/07/2014 11:10:33 AM PST by rey
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To: SeekAndFind

102 Million adults are NOT employed.

146 million Adults are employed.

Guess the real percent of adults unemployed.

DemocRat NO care will destroy another 2 million jobs soon - per the CBO.


23 posted on 02/07/2014 11:18:49 AM PST by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: SeekAndFind

Unemployment rates are down but FUNemployment is at an all time high.


24 posted on 02/07/2014 11:56:53 AM PST by Organic Panic
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To: george76

RE: 102 Million adults are NOT employed.

146 million Adults are employed.

Guess the real percent of adults unemployed.

____________________________________________

That would be 248 potential workers in the US workforce. If as you say, 102 Million people are not employed, the REAL unemployment rate would be about 41% !!

BTW, where are you getting your numbers from?


25 posted on 02/07/2014 12:32:27 PM PST by SeekAndFind
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To: SeekAndFind

91,455,000 adults gave up looking for a job [ not officially in the labor force, but still unemployed ] plus the 10,236,000 adults officially unemployed [ U-6 , from the Bureau of Labor Statistics ] .

Total 102 Million adults unemployed.

http://www.cnsnews.com/news/article/ali-meyer/1154000-fewer-americans-working-today-6-years-ago


26 posted on 02/07/2014 1:40:51 PM PST by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: SeekAndFind

Birth & Death adjustment is extrapolation of past data. It tells them about expansion of the work force.


27 posted on 02/07/2014 4:43:20 PM PST by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: Mad Dawgg

Obviously they can not survey every business, so it is just a statistical sample extrapolation.

Like I said, the only accurate count of jobs + self employed is how many people are paying social security tax. All earned income is subject to SS tax. Then divide that by adults of working age counted in the Census data and you will know the true picture.

Admittedly that number will show high unemployment because some people do not want to work at a job. But those people certainly should not be excluded from the ranks of unemployed.


28 posted on 02/07/2014 4:48:56 PM PST by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: SeekAndFind
Job openings - Non-farm


29 posted on 02/07/2014 4:50:26 PM PST by Wyatt's Torch
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To: 1rudeboy

The most critical and important point I want to make is the unemployment published number excluds anyone not actively looking for jobs because they have given up any hopes of finding a suitable job. I have read and heard there are 92 million adults without a job or self employment.


30 posted on 02/07/2014 4:51:54 PM PST by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: entropy12
Ok, so stop talking about unemployment compensation (and State agencies).

For example, I'm not eligible for unemployment comp, and if I lose my job I will be counted (if the survey-taker calls me).

31 posted on 02/07/2014 4:54:43 PM PST by 1rudeboy
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To: ek_hornbeck

“A “recovery” where people with skills work at Wal-Mart isn’t much of a recovery.”

A recovery where people with skills can’t get hired at Wal-Mart is even less of one.


32 posted on 02/07/2014 6:30:43 PM PST by RipSawyer (The TREE currently falling on you actually IS worse than a Bush.)
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To: 1rudeboy

What are the chances you will be called?
Unless you are actively registered with some gov’t agency as a job seeker, no one in the gov’t knows you are unemp-loyed nut looking.

Why do you think those unemployment numbers get significantly revised after a month lapses? Because they were severly extrapolated and are never accurate.

Just count how many are paying social security tax. Every single soul who has a job or self employed pays that tax. Everyone else is unemployed. Why do they have to be actively looking to be counted? Because it makes a rosier picture than it is.


33 posted on 02/07/2014 10:32:26 PM PST by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: SeekAndFind
Can you or someone please enlighten me on what this birth/death data is? I keep reading about it but don’t understand what it means... I know it is an estimate, but what is it an estimate of and why can’t we count on it?

The Birth and Death numbers are a guesstimate of how many jobs are created and lost as a result of businesses opening and closing.

A mathmatical formula, supposedly based on the recent past, is used to guesstimate the number.

You can read more about it here.

The Birth and Death number is applied to the non-seasonally adjusted number and run through seasonal adjustment to get the headline number of payroll jobs created.

I have not been able to determine if the non seasonaly adjusted numbers in table B-1 include the Birth and Death numbers or not. BLS documentation tends to fall in the category of 'hiddrn in plain sight'.

Note The Birth and Death Model only applies to the Payroll data collected from business.
34 posted on 02/08/2014 1:39:22 AM PST by khelus
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To: Mastador1; SeekAndFind
Re:For every one job open, I would say there are at least 10 candidates applying for it.

If only! I have been involved in one testing situation where I was testing against over seven hundred other applicants for ONE position, and that was just the testing phase prior to their deciding who to actually interview. On average the number of people I have been competing against for a job has been over a hundred and never less than fifty, and once again thats after the initial qualification weed out to go to the testing weed out prior to interview.


Your higher numbers are more realistic based upon what I have experience in the tri state area.
35 posted on 02/08/2014 1:43:39 AM PST by khelus
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To: entropy12; OneWingedShark
Re:All depends on the meaning of word “UNemployment”....BJC

Yes, the number is a joke. They count only those receiving unemployment and those actively seeking jobs by registering with state agencies. On top of that they superimpose birth/death data to further massage the number.

The only correct number can be found by looking at how many are paying social security tax, because every single soul who has a job or a business must pay that tax. But that would be too much transparency and too much embarrassment so the gov’t won’t tell us.


Actually the BLS has made it more complicated than that.

There are two surveys: one of households and one of businesses.

The household survey produces the unemployment rate. It does not count those collecting unemployment each month nor those registered as looking for a job.

The number collecting umemployment is used however once a year for an 'annual benchmark adjustment'.

The main manipulation of the household data is through seasonal adjustment and manipulation of which bucket you are placed. A great way to suppress the unemployment rate is to remove more and more people out of the civilian labor force.

The payroll survey produces the number of jobs created. The raw data is run through the Birth and Death model and seasonal adjustment to created the 'headline' number of jobs created.
36 posted on 02/08/2014 2:20:29 AM PST by khelus
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To: ek_hornbeck
TRe: he real problem is that the number, originally designed for limited purposes, has come to assume totemic status. Focusing so single-mindedly on this one employment figure has made it impossible to have a cogent discussion of labor in the U.S. and to design meaningful responses to our varied economic problems.

An even bigger problem is that the official unemployment rate is a big underestimate. Everyone acknowledges that it doesn't count those who have given up looking for jobs, but it also fails to account for the vast number of underemployed: skilled workers and even professionals who are stuck in dead-end, near minimum wage (and often part-time) jobs in retail or elsewhere in the unskilled service sector. A "recovery" where people with skills work at Wal-Mart isn't much of a recovery.


Appplause
37 posted on 02/08/2014 2:24:45 AM PST by khelus
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To: entropy12
Let's back up a minute. Your statement, that "[t]hey count only those receiving unemployment and those actively seeking jobs by registering with state agencies," is incorrect.

It's fruitless to discuss how the number is inaccurate until you acknowledge it.

38 posted on 02/08/2014 6:53:44 AM PST by 1rudeboy
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To: 1rudeboy

I should have said “Those are the ONLY accurate data the government has at their disposal.” Everything else such as surveys, extrapolation based on past data, seasonality, etc are subject to very high errors.

Just stop giving us these phony unemployment numbers which are always revised and even then they are not necessarily correct.

Just give me the exact count of social security tax collection data every 3 months. It is 99% accurate. And we already know last Census numbers for able bodied adults in the population.

DO not get hung up on my statement. Get with the crux of the problem, which is phony numbers given out by our government. Stop looking at trees and get lost in the forest. Build more maturity of thought. It is childish to pick on “statements” and miss the central object.


39 posted on 02/08/2014 10:18:47 AM PST by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: entropy12

I don’t think you understand. If the object is to convince people that the government releases phony or otherwise inaccurate numbers (yes!), then you will get nowhere with them by arguing facts that are demonstrably false (no!).


40 posted on 02/08/2014 10:29:37 AM PST by 1rudeboy
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To: Mastador1
I attended a jobs workshop at the county employment office last month and the presenter said there are 300-600 applications for every job posted by that office.

There is a serious employment (and under employed)crisis in many parts of the country and too many conservatives are brushing it off as lazy people that don't want to work.

I seriously fear that if it gets much worse-and it isn't getting better despite the BS numbers-there will be economic repercussions that may eventually cause a deep recession.

What really chaffs me is the pols in DC who want to take care of illegals but don't give a crap about the millions of Americans who are seriously struggling.

41 posted on 02/08/2014 12:45:29 PM PST by NEPA (Give me liberty, not debt)
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To: jeffc

Free Traders believe it’s more important to employee Chinese than Americans. They believe import tariffs like our founding fathers put in place are bad.

By fostering policies that increase unemployment including low import tariffs, Free traders are the biggest enablers of big government that there is.


42 posted on 02/08/2014 12:56:29 PM PST by DannyTN
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To: NEPA
I attended a jobs workshop at the county employment office last month and the presenter said there are 300-600 applications for every job posted by that office.

I had a meeting with the folks at my county, the caseworker greeted me with a big smile and asked "How's it going", I looked at him and said, well I'm here, how do you think it's going? One of the most interesting things he told me is that they are having a huge problem with businesses not wanting to hire older applicants because they fear they will leave as soon as something better comes along. So I asked where someone would quit to go to when there isn't anything out there?

43 posted on 02/08/2014 12:56:48 PM PST by Mastador1 (I'll take a bad dog over a good politician any day!)
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To: SeekAndFind

44 posted on 02/08/2014 12:57:17 PM PST by DannyTN
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To: Mastador1
they are having a huge problem with businesses not wanting to hire older applicants

I'm 57. Age is definitely a factor in having a hard time finding a job.

Actually I'm temporarily laid off from a job I can go back to but its pretty much only part time now, I used to make a decent living on it.

I wasn't eligible for state UC when I got laid off in October because I had too much earnings in 1 quarter that wasn't balanced out by the other 3. I was put on the fed extension from an old claim but now that's gone as well as my savings from being under employed for so long.

I got into a training program to drive trucks and I'm using credit cards to pay for gas to get there. A relative moved in with me and gives me a little money each week but I'm in a tough spot. Bills aren't getting paid, I'm almost out of heating oil.

I have never in my life been in this situation. I never needed to ask for help, I was the one that helped others.

For some reason I decided to write an email to Sen Toomey to let him know not every unemployed person is lazy as many conservatives imply. I knew it would be useless but I figured it can't hurt either.

I used Toomey's website to send it but when I hit "submit" it came back "invalid subject". I guess if its not a topic Toomey agrees with it just gets rejected.

45 posted on 02/08/2014 1:51:55 PM PST by NEPA (Give me liberty, not debt)
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To: Mastador1

Thank you. The economy today is not the same as the one my parents grew up in. Hard work does not always equal opportunity anymore, even though it once did. Some don’t understand this.


46 posted on 02/08/2014 2:23:07 PM PST by same old song
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To: OneWingedShark
I’ve seen figures that put the real unemployment rate at 30-40%.

What we are going through is worse than the Great Depression. As counter productive as was the New Deal, at least the guvmint thought employment was better than unemployment.

These days we have at least the percent unemployed as at the height of the Great Depression. We also have many more legions underemployed. Plus our supposed natural born leaders are saying that's a good thing, and our unparalleled free press gives them cover.

Policies and laws are designed to make it worse. A depression is a recession until the government fixes it.

47 posted on 02/09/2014 2:51:05 PM PST by stevem
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Bookmarking


48 posted on 02/09/2014 3:34:49 PM PST by RandallFlagg ("I said I never had much use for one. Never said I didn't know how to use it." --Quigley)
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