Unemployment During the Great Depression Has Been Overstated and Current Unemployment Understated (We've Now Got Depression-Level Unemployment)

George Washington's picture

Washington’s Blog

The commonly-accepted unemployment figures for the Great Depression are overstated.

Specifically, government workers were counted as unemployed
by Stanley Lebergott (the BLS economist who put together the most
widely used numbers) ... even though gainfully employed and receiving a
pay check.

If we're trying to compare current unemployment
figures with the Great Depression, the calculations of economists such
as Michael Darby are more accurate.

Here is a comparison of Lebergott and Darby's unemployment figures:

Year Lebergott Darby
1929 3.2% 3.2%
1930 8.7% 8.7%
1931 15.9% 15.3%
1932 23.6% 22.9%
1933 24.9% 20.6%
1934 21.7% 16.0%
1935 20.1% 14.2%
1936 16.9% 9.9%
1937 14.3% 9.1%
1938 19.0% 12.5%
1939 17.2% 11.3%
1940 14.6% 9.5%

(see Robert A. Margo's Employment and Unemployment in the 1930s.)

We've Got Depression-Level Unemployment

Unemployment is currently underreported. Even government officials admit that their "adjustments" to unemployment figures are inaccurate during recessions.

addition, the most widely-cited statistics use the Department of
Labor's Bureau of Labor Statistics' "U-3" methodology. But "U-6"
figures are more accurate, because they include people who would like
full-time work, but can only find part-time work, or people who have
given up looking for work altogether. U-6 is also is closer to the way
unemployment was measured during the Great Depression than U-3

Current levels of unemployment are Depression-level numbers, especially when compared to Darby's figures.

For example, economist John Williams puts current U-6 unemployment at 15.9%. That's higher than 9 out of 12 years charted by Darby.

there are certainly Depression-level statistics in some states. For
example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:

  • California: 22.0
  • Nevada: 23.7
  • Michigan 20.3
  • (and Los Angeles County has 24.1% unemployment, higher than any of the Depression years as reported by Darby)

Williams puts SGS unemployment - which he claims is the most accurate measure - at 22.3%. That's higher than 11 out of 12 years charted by Darby.

Youngstown State University's Center for Working Class Studies puts the "De Facto Unemployment Rate" at 28.76%.
I'm not sure if that compares to methods used during the Great
Depression, but it surpasses all 12 out of 12 years charted by Darby.

More People Are Unemployed than During the Great Depression

As I noted in January 2009:

In 1930, there were 123 million Americans.

At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 people, were unemployed.

Will unemployment reach 25% during this current crisis?

I don't know. But the number of people unemployed will be higher than during the Depression.

Specifically, there are currently some 300 million Americans, 154.4 million of whom are in the work force.

Unemployment is expected to exceed 10% by many economists, and Obama "has warned that the unemployment rate will explode to at least 10% in 2009".

10 percent of 154 million is 15 million people out of work - more than during the Great Depression.


Given that the broader U-6 measure of unemployment is currently around 17% (ShadowStats.com puts the figure at 22%, and some put it even higher), the current numbers are that much worse.

Unemployment is Long-Term


USA Today reported in December:

So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.

what it calls "an unprecedented rise" in long-term unemployment, the
federal Bureau of Labor Statistics (BLS), beginning Saturday, will
raise from two years to five years the upper limit on how long someone
can be listed as having been jobless.


The change
is a sign that bureau officials "are afraid that a cap of two years
may be 'understating the true average duration' — but they won't know
by how much until they raise the upper limit," says Linda
Barrington, an economist who directs the Institute for Compensation
Studies at Cornell University's School of Industrial and Labor


"The BLS doesn't make such changes
lightly," Barrington says. Stacey Standish, a bureau assistant press
officer, says the two-year limit has been used for 33 years.


Although "this feels like something we've not experienced" since the Great Depression, she says, economists need more information to be sure.

The Wall Street Journal noted in July 2009:

The average length of unemployment is higher than it's been since government began tracking the data in 1948.


job losses are also now equal to the net job gains over the previous
nine years, making this the only recession since the Great
Depression to wipe out all job growth from the previous expansion.

The Christian Science Monitor wrote an article in June entitled, "Length of unemployment reaches Great Depression levels".

60 Minutes - in a must-watch segment - notes
that our current situation tops the Great Depression in one respect:
never have we had a recession this deep with a recovery this flat.
60 Minutes points out that unemployment has been at 9.5% or above for
14 months.

Pulitzer Prize-winning historian David M. Kennedy notes in Freedom From Fear: The American People in Depression and War, 1929-1945 (Oxford, 1999) that - during Herbert Hoover's presidency, more than 13 million Americans lost their jobs. Of those, 62% found themselves out of work for longer than a year; 44% longer than two years; 24% longer than three years; and 11% longer than four years.

Blytic calculated
last year that the current average duration of unemployment is some
32 weeks, the median duration is around 20 weeks, and there are
approximately 6 million people unemployed for 27 weeks or longer.

As Calculated Risk noted last month:

to the BLS, there are 5.839 million workers who have been unemployed
for more than 26 weeks and still want a job. This was down from 6.122
million in March. This remains very high, and is one of the defining
features of this employment recession.

Job Destruction is Permanent


Many leading economists say that America is suffering a permanent destruction of jobs.

For example, JPMorgan Chase’s Chief Economist Bruce Kasman told Bloomberg:

[We've had a] permanent destruction of hundreds of thousands of jobs in industries from housing to finance.

The chief economists for Wells Fargo Securities, John Silvia, says:

“really have diminished their willingness to hire labor for any
production level,” Silvia said. “It’s really a strategic change,” where
companies will be keeping fewer employees for any particular level of
sales, in good times and bad, he said.

And former Merrill Lynch chief economist David Rosenberg writes:

number of people not on temporary layoff surged 220,000 in August
and the level continues to reach new highs, now at 8.1 million. This
accounts for 53.9% of the unemployed — again a record high — and this
is a proxy for permanent job loss, in other words, these jobs are
not coming back. Against that backdrop, the number of people who have
been looking for a job for at least six months with no success rose a
further half-percent in August, to stand at 5 million — the
long-term unemployed now represent a record 33% of the total pool of

And see this.

Despite What the Government Says, Reducing Unemployment Is a Very Low Priority

While government officials talk a good game, government policy has actually not been geared towards fighting inflation, not creating more jobs.

Some Jobs Are Being Created ... But Mainly In the Military

127,000 jobs need to be created each month just to make sure that things aren't getting worse. (127,000 is the monthly population increase in the United States.)

But - according to the Bureau of Labor Statistics - only 54,000 total nonfarm payroll jobs were created last month.

There is fierce debate about how much the government has spent to create a few measly jobs. Some say that it is an insane amount, while others say the figure is lower. And see this .

But the truth is that there wasn't very much
government stimulus aimed towards creating jobs at all ... other than in
the military. As I pointed out in 2009, public sector spending - and mainly defense spending - has accounted for virtually all of the new job creation in the past 10 years:

U.S. has largely been financing job creation for ten years.
Specifically, as the chief economist for BusinessWeek, Michael
Mandel, points out, public spending has accounted for virtually all
new job creation in the past 10 years:

Private sector job growth was almost non-existent over the past ten years. Take a look at this horrifying chart:




May 1999 and May 2009, employment in the private sector sector only
rose by 1.1%, by far the lowest 10-year increase in the
post-depression period.


It’s impossible to overstate how bad
this is. Basically speaking, the private sector job machine has
almost completely stalled over the past ten years.

Take a look at
this chart:




the past 10 years, the private sector has generated roughly 1.1
million additional jobs, or about 100K per year. The public sector
created about 2.4 million jobs.


But even that gives the private
sector too much credit. Remember that the private sector includes
health care, social assistance, and education, all areas which receive a
lot of government support.



of the industries which had positive job growth over the past ten
years were in the HealthEdGov sector. In fact, financial job growth was
nearly nonexistent once we take out the health insurers.


Let me finish with a final chart.




a decade of growing government support from rising health and
education spending and soaring budget deficits, the labor market would
have been flat on its back.

Indeed, Robert Reich lamented last year:

America’s biggest — and only major — jobs program is the U.S. military.

Raw Story argues that the U.S. is building a largely military economy:

use of the military-industrial complex as a quick, if dubious, way
of jump-starting the economy is nothing new, but what is amazing is
the divergence between the military economy and the civilian economy,
as shown by this New York Times chart.


the past nine years, non-industrial production in the US has
declined by some 19 percent. It took about four years for
manufacturing to return to levels seen before the 2001 recession --
and all those gains were wiped out in the current recession.


contrast, military manufacturing is now 123 percent greater than it
was in 2000 -- it has more than doubled while the rest of the
manufacturing sector has been shrinking...

It's important to note
the trajectory -- the military economy is nearly three times as
large, proportionally to the rest of the economy, as it was at the
beginning of the Bush administration. And it is the only
manufacturing sector showing any growth. Extrapolate that trend, and
what do you get?

The change in leadership in Washington does not appear to be abating that trend...

most of the job creation has been by the public sector. But because
the job creation has been financed with loans from China and private
banks, trillions in unnecessary interest charges have been incurred
by the U.S. And this shows military versus non-military durable goods

[Click here to view full image.]

we're running up our debt (which will eventually decrease economic
growth), but the only jobs we're creating are military and other
public sector jobs.

This might be okay from a strictly
economic (as opposed to moral) perspective if defense jobs reduced
unemployment. But, as many economists point out, the fact is that
massive military spending actually increases unemployment in the long-run.

For example, PhD economist Dean Baker notes that America's massive military spending on unnecessary and unpopular wars lowers economic growth and increases unemployment:

spending means that the government is pulling away resources from the
uses determined by the market and instead using them to buy weapons
and supplies and to pay for soldiers and other military personnel. In
standard economic models, defense spending is a direct drain on the
economy, reducing efficiency, slowing growth and costing jobs.

few years ago, the Center for Economic and Policy Research
commissioned Global Insight, one of the leading economic modeling
firms, to project the impact of a sustained increase in defense
spending equal to 1.0 percentage point of GDP. This was roughly equal
to the cost of the Iraq War.

Global Insight’s model projected
that after 20 years the economy would be about 0.6 percentage points
smaller as a result of the additional defense spending. Slower growth
would imply a loss of almost 700,000 jobs compared to a situation in
which defense spending had not been increased. Construction and
manufacturing were especially big job losers in the projections, losing
210,000 and 90,000 jobs, respectively.

The scenario we asked Global Insight [recognized as the most consistently accurate
forecasting company in the world] to model turned out to have vastly
underestimated the increase in defense spending associated with
current policy. In the most recent quarter, defense spending was equal
to 5.6 percent of GDP. By comparison, before the September 11th
attacks, the Congressional Budget Office projected that defense
spending in 2009 would be equal to just 2.4 percent of GDP. Our
post-September 11th build-up was equal to 3.2 percentage points of GDP
compared to the pre-attack baseline. This means that the Global
Insight projections of job loss are far too low...

The projected job loss from this increase in defense spending would be close to 2 million.
In other words, the standard economic models that project job loss
from efforts to stem global warming also project that the increase in
defense spending since 2000 will cost the economy close to 2 million
jobs in the long run.

And the Political Economy Research Institute at the University of Massachusetts, Amherst has also shown that non-military spending creates more jobs than military spending.

Government policy has largely caused
the current unemployment crisis. And until Washington and Wall Street
are forced to change course, things will not meaningfully and
significantly improve for a long time.



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AssFire's picture

Things are going great in the Republic of Texas... I wonder why all these damn businesses keep moving here?? It's like they know it is coming to an end and they want to be here.

I am so thankful LBJ lit the entitlement fuse that will ultimately blow up the nation that stole our liberty when it forced its citizens at gun point to kill our citizens. 

We have industries and people who don't mind working hard; you guys get the entitled unions and gov. workers- enjoy. Simply thrilled the end is soon.


cynicalskeptic's picture

Throw in the REAL inflation stats and we're at a record 'misery index'....  there's a reason governments fudge statistics.....  

keeps the sheeple from realizing they're not alone and rioting in the streets.  keep the bread and circuses coming.... only now we pipe the entertainment/diversions directly into your home (safer than letting the masses gather in the Coliseum where they can compare notes).... Food stamps are at a record number and unemployment benefits the same....  otherwise the corners would be full of apple sellers

geno-econ's picture

And the polititians are singing the common refrain "we need to concentrate on jobs" but are short on specifics.  Meanwhile everyday you hear another multinational is raising profit forecasts by going "global" , another term for "outsourcing" as well as closing plants in the US.   Last week Mazda ended partnership with GM and shifted production to Mexico. Also Delphi closed 13 US plants and is going global.  It seems we are hooked on a "global economy" while losing any US comparative advatages . All this will not end well because the economic model based on rising deficits cannot create jobs or real growth in near term. Sure , weakening US$ can eventually increase exports but don't hold your breath because financial meltdown will occur first

Arkadaba's picture

Currently looking for a new position but not that worried. I have decided to limit my ZH news just because I need to stay positive.  Why I have faith:


And yeah yeah  - not in denial.

And: http://en.wikipedia.org/wiki/The_Little_Prince

eternalblue's picture

i am biased being in the aerospace industry but i want to point out the "military shipments" graph is somewhat misleading.

The Pentagon has had budget pressure for last couple years and many programs have seen their budgets from the US cut.   Consequently, and as a result of the Fed turning the USD into toilet paper, many of these programs have turned to international sales. 

So that surge in military products may not even be mostly US funded, it may be international products.

Flakmeister's picture

Can I haz replay of Rome?

Alcoholic Native American's picture

lol, better take you and your children and hide out in the burbs until this whole thing blows over.


Whatta's picture

The wife called a little while ago while crossing N. Mex on her way to see relatives in Colorado...passing a small roadside park in the middle of no where she saw a couple, apparently living at the park in a small tent with a sign saying something like, "We are desperate, please help".

Apparently they didn't once live in Calif., buy more house than they could afford, and get the memo you don't get evicted any longer if you don't pay your mortgage.

OmeriKa 2011.

Note to self's picture

Question:  With the unemployment where it is right now, why is there apparently less of a homeless problem nationwide?  Whne employment was officially lower in 80s and 90s, we had mpore homeless.  What am I missing.  (Joke answers ok, anecdotes not allowed, true explanations most appreciated.)

Arkadaba's picture

Moving in with relatives.

Mec-sick-o's picture

The homeless got nice loans to get an unpayable house.  Instead of being homeless, they are really houseless.

Conchy Joe's picture

On top of that is underemployment.Is there anyomne who really tracks that accurately?

Most people I know that are still employed are making anywhere from 20 - 60% less than they were three years ago.

Many are working three and four day work weeks - effectively they have lost a quarter of a job.

ebworthen's picture


The Republicrats want to believe it is 1980.

The Demicans want to believe it is 1992.

It is 1933, except we have sold out our manufacturing base and citizens to Asia - and farms are inhabited by oil consuming machinery run by corporations and staffed by illegal immigrants rather than 33% of the U.S. population as families going to church on Sunday.

House of cards, house of cards, house of cards...


Buck Johnson's picture

Spot on, spot on.  We are being fleeced like no other people.  Because our people are ignorant and selfish and hateful and spiteful to anyone that has more than they do or look different.  Divide people and have them fight among each other, then they can move around the countryside looting while you fight another for nothing more than some perceived slight.  The US is a house of cards and their is no way out of it.

firefighter302's picture

And Steve Liesman and others on the idiot box and in Congress continue to say that higher taxes are the answer to job growth.

The size and scope of government is destroying us and the Democrats (and many Republicans) insist on telling us that more of the exact same, is the answer.  Is that not the clinical definition of insane? 

 Stop spending. No more debt. Cut entitlements. Cut taxes. Cut the military spending in 1/2. Get the troops home. Cut the foreign handouts. End the FED. Burn the Patriot act. Follow the Constitution.

That's the road recovery for "We The People".

(Phew...that felt good.)

Shell Game's picture

+++   Great post, very well said.

Tomified's picture

Not fair to compare. Back then we had larger families that were typically supported by only one working parent. Today we have small families with both parents working; if only one of them loses their job, it's not the end of the world. Our current true unemployment likely causes much less suffering than unemployment during the depression.

buck4free's picture


You have it completely backwards. 

See: "Two Income Trap".

Great presentation on it here:


kumquatsunite's picture

Oh heck just call it like it is...meaning, the welfare crowd is exchanging body fluids (yuck!) and being paid to do so in order to create a morlock class that will be happy to one off their "betters". If you think this isn't so just look at who is shaking you down when you fly...class warfare? Think they don't enjoy watching you squirm and tell tales of it later at the tavern as they fall off the stool in a stupor? You are letting them breed on your dime, creating more, even dumber, mouth-breathers...good luck with that: they'll turn canabalist sooner or later, and you will be...tasty. Don't you just love where "compassion" takes ya?

AssFire's picture

You Sir,

Are invited to Texas! Soon the skums will turn on themselves in the self cleaning oven that cranks up when their free shit runs out. Darwin knows; it is the law of species

Your story is so similar to the story Barry recounts in the book Ayers wrote for him: Enjoying admonishing white people to pick up their dog's shit.. 

Now junk me you brain washed liberals.

Loose Caboose's picture

Jeezuuuusssss!  Can you get any more smug or condescending you morally superior POS?  Talk about using a broad brush and demonstrating a total lack of empathy.  Not everyone on welfare is a "mouth-breather". And your exchanging of bodily fluids is just as yuck, believe it or not.  We all like to think that the other guy (class, race, sex - you fill in the blank) is the problem.  It's just what the elite want us to do.  Some day, some how, I wish you ill.  An attitude like yours deserves a walk in someone else's shoes - and with the tough times ahead, I'm sure we'll all get a chance at hard times.  May yours be a little harder for your lack of compassion.

ibjamming's picture

Are you kidding?  We'll shoot them down like dogs.  We'll keep them corraled in the inner cities.  They're not a threat.

Conchy Joe's picture

But more of them also lived within their means with many families capable of sustaining themselves for at least a few weeks.

Hasn't been like that in 40-50 years has it?

nah's picture

can i vote for more

Esso's picture

You will be allowed to push the bright, shiny, candy-like buttons on the make-believe, pretend voting machine, if that makes you feel any better.

But to answer your question in a word, no.

Voting is far too important to be left up to the subjects.

AR15AU's picture

And the Political Economy Research Institute at the University of Massachusetts, Amherst has also shown that non-military spending creates more jobs than military spending.

Your such a douche... quoting fucking liberal college studies that say giving money to liberal colleges is better.  The military is one of the few legitimate areas of Federal government expense. Yes, the military needs deep cuts, but the department of education can be eliminated outright.

TheBillMan's picture

Okay, I was going to write something about the military and going off to war, but I'll just say this.  Lay off the Left/Right BS.  Both sides are whores who take money from Wall Street.

AR15AU's picture

I agree that we should not be going to war. But my overall point is that the military is one of the few legitimate services for the Federal government to be providing, and that even those services can be greatly curtailed..


Right Wing means Limited Government, and that concept is real, even if "republicans" don't embrace it. Yes my friend. Republican vs Democrat is a bullshit game, but Right Wing vs Left Wing is a very real battle.

Founders Keeper's picture

[Republican vs Democrat is a bullshit game, but Right Wing vs Left Wing is a very real battle.]---AR15AU

Perhaps TheBillMan misspoke. Maybe meant to say Reps vs Dems is a non-sensical game.

Now, Left(progressive, liberal, socialist, Marxist) vs Right(constitutionalists, individualists, classic liberalism, conservatism, capitalism) is indeed the only battle. (Personally, I put the "Left" on the left, the "Right" in the center, and the anarchists on the right.)

There's always been two camps of thought (left of "center" and right of "center." Where more exists, they stand as variations on one of the two camps.

Yours was a good post. Got Junks? You aren't really posting until you get Junked. Keep up the good work!



White.Star.Line's picture

Any published report, statistic, or accounting by this "paid for" government cannot be trusted. The books from mob-owned Las Vegas casinos in the 1960's were more legitimate.

Shell Game's picture

The employment situation is F.U.B.A.R.  If you are not government employed or corporate employed, you are shit out of luck and destined for a fast food job, if you're lucky.

Of course QE3 is not the answer we want, but it will be the answer we will get. The charade must go on as it's now a matter of national security for TPTB.  When people finally understand that government and paper money are never the solution, maybe we'll start to rebuild.

Transformer's picture

Likely, the answer we will get is hyperinflation, starting up in early fall, perhaps much sooner if a sudden loss of faith in the dollar occurs.  If hyperinflation starts, the Fed will need no justification for QEx or any other stimulus, the government will simply be trying to survive and pay its bills.  Never in history has a fiat currency been used by the whole world, with such a huge military machine to be supported by the issuing country.  There is no other sovereign nation to bail out the US.  Collapse is inevitable at some point, whether it be the financial system, or the US government. 

We are in an unprecedented situation which will lead to unprecedented outcomes.  See



Shell Game's picture

That is my point exactly. QE-X to infinity.  Collapse is coming and there is only one form of collapse that benefits the elite and that is hyper-inflation.  Those with nearest access to freshly 'minted' FRN will be the first to exchange them for tangilbes - the very essence of HI.  I read that report from William's a couple days ago, very good.

camaro68ss's picture

Im starting to shake, I need some of that QE3..... you got any?

Conchy Joe's picture

None of us will ever get any - but you can bet we'll pay for it.

dracos_ghost's picture

Except QE(x) will insure MORE unemployment. Why take risks hiring, buying capital equipment, etc.. -- you know do business and build economies -- when Benny and Jets will just comp more money to the banksters and Wall Street elite to play in the casino.

Bernank needs an intervention. The free money(ie heroin) ain't working bubba.


mickeyman's picture

Here's a link to a chart that may prove your point. In this recession, more money creation has correlated with higher unemployment (using official BLS statistics).


Worse, we are now at a point where the change may have become irreversible. Reversing the monetary spigots has not reversed unemployment.