June employment statistics were released by the U.S. Department of Labor last week showing the national unemployment rate holding steady at 5.5%.

Headlines suggested stock markets reacted favorably to the news, since it fell in line with Wall Street expectations. However, there’s more to the story that gives cause for alarm.

The Wall Street Journal reported that the number a long term unemployed, those without jobs for over 26 weeks, has risen 37% in the last year. meanwhile, the overall unemployment rate has broken a four-year downward trend and is now on the rise.

Coupled with rapidly deteriorating stock and real estate markets, and rising inflation and commodities prices (including energy and food) it’s time for those of who are not multi-millionaires to start budgeting.

Everyday seems to bring more bad news about the economy, but is this media hype or is there merit to the tales of doom? For 5.5% of the working age population, things are not looking that great. Unemployment was on a prolonged four-year down trend in the U.S, up until about the time the real estate market started to come off its highs in early 2007.

Figure 1 – U.S. Dept. of Labor, Bureau of Labor Statistics. Overall unemployment rates.

Worse, though, is the drastic rise in long-term unemployment. This is the result of a broader trend in American employment, or lack thereof, in which changing industry characteristics are disenfranchising a larger portion of the population. An often-cited example is the decline of high paying manufacturing jobs. Combined with a shorter-term spike in unemployment, these figures are becoming worrisome.

Figure 2 – U.S. Dept. of Labor, Bureau of Labor Statistics. Long-term unemployed (> 26 weeks) rates.

These are not great statistics, but they by no means indicate the sky is falling. What they do suggest is that it may be time to start planning your financial future with a bit more earnest. This means creating a budget, understanding exactly what you earn and where it goes, boosting savings rates, diverisfying into inflation-protected securities, dollar-cost-averaging for falling assets, and diversifying the ways in which you earn income.

Most of us have a primary source of income through employment. Having a job is a privilege, not a God-given right. The business environment naturally changes over time and you may find the skills you thought would define a life-long career are no longer economically useful. Just look to the long-term unemployment statistics and you’ll see what I’m talking about. Detroit automobile workers seem to have been blindsided to the reality that screwing a bolt to a metal frame isn’t worth $50 an hour with full benefits and a guaranteed defined-benefit pension plan.

When Japanese workers can do a better job for half the cost reality finally catches up…it always does! This is why now, more than ever, it’s critical to diversify your own labor skillsets. Cross train as much as you can on the job, learn as many new skills as possible, and treat education as a lifetime process, not something that stops after high school or even undergraduate school. Monitor the labor market and take a proactive role; if you see big cuts in your industry start looking for alternative jobs in others.

A primary job need not be your only form of income. Some of the most successful people I know work two jobs; one primary and a secondary that is either something fun for them, or related to their primary job. An example is a friend of mine who works as a mathematician by day and a math teacher in the evenings at a community college. He earns 6-8 times what he needs to live on from his first job, so the second is merely a hedge on ever losing the first, a nice income bonus of which he saves 100%, and a fun learning experience that makes him more valuable in the labor market in general.

The American spirit has always been one of independence and self-sufficiency. Take your life into your own hands and realize you have responsibility fo rmaking it successful. Relying on your boss, your company, or the government to take care of you is a recipe for failure. My final parting thought is to remind everyone that entrepreneurship is always an alternative, even if done on a part-time basis to augment your primary income. We live at the best time in human history to participate in small business. You can start and run an Ebay business, sourcing and selling products around the globe, from the comfort of your home in the evenings. The only limits in this world are your own creativity!

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