Thomas DiLorenzo – professor of economics at Loyola College in Maryland and a member of the senior faculty of the Mises Institute – argues:
Fed official Dennis Lockhart recently stated that if people who have simply given up on finding a job (“discouraged workers” in governmentspeak) are counted, the actual unemployment rate is more like 16 percent. That would be comparable to the unemployment rate in Depression years 1931 (15.9%), 1936 (16.9%), 1937 (14.3%), and 1940 (14.6%).
Government miscalculated the unemployment rate during the Depression years by counting many government make-work employees as unemployed. As a result, economists think the unemployment rate might have been exaggerated by as much as 5 percentage points. That would make the 1940 Depression unemployment rate almost exactly what it is today, without counting the “discouraged workers.”
See this for background.