This morning’s news that U.S. unemployment has hit 13.7 million, pushing the rate to 8.9 percent, tells only half the story of this recession.
The total number of Americans who are not working full-time but ought to be is actually about 22 million, or 15.8 percent, according to the Bureau of Labor Statistics.
Who are those other 8.3 million Americans? Call them the unofficially unemployed.
As The Ticker points out each time the Bureau releases the monthly unemployment figure, it does not include many out-of-work Americans.
There are many reasons for this.
The bureau, which is under the Labor Department, cannot use unemployment compensation records to count the out-of-work, because they are not reliable or up-to-date enough. The bureau also cannot count every out-of-work person.
Instead, as The Ticker reported here in December: “In the case of the monthly jobs report, the Labor Department contacts 60,000 households to determine the unemployment picture for the entire workforce, which consists of about 154 million Americans.”
The problem with this methodology is that it does not include millions of Americans who are not working full-time who ought to be. Those, in the bureau’s words, who are “marginally attached to the labor force.”
Those numbered an additional 2.1 million Americans in the first quarter of this year, the bureau said. Alarmingly, that number was up 35 percent from the first quarter of 2008.
Of this number, the bureau categorized 717,000 as “discouraged” workers, or those that have simply given up looking for work for any number of reasons. That number was up 70 percent from the first quarter of 2008.
“Discouraged” workers include a disproportionate number of young people, blacks, Hispanics and men, the bureau said.
On top of all of this, add an additional 3.6 million unemployed Americans who say they want a job but have not looked for work in the past 12 months.
The remaining 2.6 million or so officially unemployed Americans include part-time workers who would prefer to have full-time jobs, those who have not looked for work because of illness or transportation reasons and those who believe they have other impediments.
But even though these workers don’t count toward the official monthly unemployment number, they are nevertheless a true weight on the economy.
They don’t pay payroll tax, or as much of it as they would; they don’t contribute to Social Security or other government entitlement entitlements and they don’t spend as much.
The 15.8 percent figure is the highest since the bureau began keeping these figures in 1994. Excluding the current recession, the highest previous rate came in January 1994, when it hit 11.8 percent.
The number was 8.7 percent in December 2007, when the current recession began. That means the number of the unofficially unemployed has shot up 7.1 percentage points since then.
By comparison, the official unemployment rate has risen 3.9 percentage points since December 2007. This suggests that a greater percentage of people are becoming disenfranchised from the workforce than are getting laid off.
By the way, in February, the White House predicted unemployment would top out at 8.1 percent this year, a figure that was blown through the following month.
It has made no call on how high the unofficial unemployment rate will go.
By Frank Ahrens
May 8, 2009
Source: The Washington Post