Explosion in Uncovered Employment During the Recovery

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Covered employment is the set of working employees that have unemployment benefits.

Self-employed persons such as myself have to pay into state unemployment insurance programs but we are ineligible to receive benefits (we are not covered).

Similarly, people selling trinkets on Ebay as well as those involved in multi-level marketing schemes and calling it their only job are not covered either.

Covered employment was one of the topics that came up in my November 2 interview on Capital Account with Lauren Lyster.

In the interview I noted that covered employment has crashed and reader Tim Wallace frequently sends me charts to prove it. Here are the latest charts from Tim.

Uncovered Employment Since January 2009

state employment since jan 2009

I added data points to Tim's chart. Let's do the math.

According to the BLS, the economy added 4,951,000 since January 2009. In the same timeframe, uncovered employment rose by 6,573,468! The difference is 1,622,468.

Got that?

133% of the jobs created since January 2009 are not covered. Employment rose by less than 5 million while uncovered employment rose by over 6.5 million.

BLS Employment History

Let's look at actual levels of employment (covered or not) since 1948. The chart compares October of 2012 with October in prior years, not seasonally adjusted.

levels of employment october bls 1948 to 2012

Employment is on an upswing but it's all self-employed or other jobs not covered by unemployment insurance benefits.

The labor force itself is flat, but it should be growing.

All of these factors severely distort the reported unemployment rate.

Structural Factors

As I have noted many times before, the falling unemployment rate is via several structural factors that actually show an underlying weak economy.

Disability Fraud: disability fraud

An amazing drop in the participation rate well beyond what demographics alone would suggest. For a discussion, please see About That "Expected" Drop In Participation Rate Also see Charting Errors in BLS Participation Rate Projections.

Obamacare: Obama Slashes Four Hours Off Definition of "Full-Time" Employment

Realistically unemployment is much higher than stated.

Source: Global Economic Analysis

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