Friday, January 1, 2010

How bad is unemployment, really?

A little investigative work by Zero Hedge, using Treasury Department figures, reveals some interesting anomalies.

In December, the amount of Unemployment Insurance payments disbursed by the US Treasury totalled $14.7 billion, a 24% increase over the $11.8 billion paid out in November. (For purposes of comparison, the government paid out $14 billion to federal employees last month, meaning that Uncle Sam is paying more in unemployment benefits than it is paying in salaries to its own workers.)

But what is really odd -- click the link above to look at the charts and graphs -- is that the amount of unemployment benefits paid by the Treasury used to very closely track with the official number of "total insured unemployed." Yet in the last year there has been a huge divergence. Unemployment payments outgoing are far above what one would expect from the number of unemployed officiall reported. This indicates that the total number of unemployed may be as much as 32% higher than officially reported.

Look at the charts. Draw your own conclusion. It looks like the goverment has found a way to hide a large part of the unemployed from the official statistics. What they can't hide is the amount of money flowing out to those insured unemployed former workers.

[UPDATE: Zero Hedge has subsequently raised the possibility that instead of an increase in unemployment that is not reflected in the Bureau of Labor statistics, perhaps the Treasury is now helping out state governments burdened with their own share of unemployment outlays. The truth is, they don't know. Further investigation will be necessary to reveal the jump in the Treasury's outlays for unemployment insurance, and why it is so out-of-whack with the BLS official unemployment numbers.]