My latest article on my blog at the Washington Times Communities, Public Square Today, is now live:
Keeping Track Of The Other Unemployed
Yesterday, the government released data by metropolitan region on unemployment. That got me thinking about one of my pet peeves with unemployment data.
That number that gets reported? It dramatically understates the problem.
The official unemployment rate is the number of people actively looking for work. That number does not include so-called “discouraged workers” (people who could work but who have given up), people who are working part time because that’s all they can find, and more. In fact, here is the official list of all the unemployed and underemployed that the official figure does not take into account:
Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
I have long known this but have not looked closely at the actual numbers, simply filed it away as a curiosity. But today I was curious: How has the American underutilized workforce been doing over the past year? I took a look at the data from November 2008 through December 2009.
Here is the official unemployment rate, month by month, for the past year or so, compared what I think of as the actual unemployment rate (which includes all those folks described above):
(Click for full size)
In November 2008, the official unemployment rate was 6.9%, and the actual rate was almost double that, 12.8%. In December 2009 it was 10% with an actual rate of 17.3%.
More than one in six Americans are out of work or are working part time because they can’t find anything else.
I understand that ral economists might quibble with my terminology, “actual” unemployment. I am not trying to win a Nobel Prize here, just look at the actual experience of real people as opposed to the press releases. I am also not pointing fingers at any administration. The recession started on George W. Bush’s watch, and continues under Barack Obama’s. It appears to be beyond both of them.
I was also curious about the “other unemployed” people. This is the group that tugs most at my heart strings. Has this gap been widening? It is hard to visualize from the bar charts so I made a new chart:
(Click for full size)
The number of “other unemployed” has been growing slowly but steadily over the last year. In November 2008 it was 5.9% and we ended 2009 at 7.3%.
In fact, while the government just focuses on the “official unemployment” rate, they make the whole set of numbers available. News organizations would provide a better snapshot of America by reporting the larger number. So, in my view, our nation’s unemployment rate stands at an incredible 17.3%.
Let’s not forget these folks.
(Note, the charts are by me, based on data from the Bureau of Labor Statistics. For those who are curious, the current recession began officially in December 2007, when the official unemployment rate was 5.0% and the actual rate was 8.8%.)