UNCOMMON SENSE 4 © revised October 2021
By Helen Lachs Ginsburg, Economics, Emerita, Brooklyn College of the City University of New York, Bill Ayres, Co-Founder of WhyHunger, and June Zaccone, Economics, Emerita, Hofstra University
Unemployment figures are not always what they seem. The U.S. Bureau of Labor Statistics (BLS) regularly reports the nation’s monthly and annual “official” unemployment rate. In 2020, this official unemployment averaged 8.1 percent, representing 12.9 million people. But these numbers don’t tell the whole story.
The BLS report provides data on large groups that are not counted as unemployed. Among them are 7.2 million involuntary part-time workers who wanted but weren’t able to get full-time employment, as well as another 7.1 million people who wanted jobs but were not actively seeking work. Of that group, 2.5 million had searched for work during the previous year and were available to take a job immediately. The rest wanted work but had not looked for it because they didn’t expect to find any, or weren’t able to work for a variety of reasons, including lack of child care or transportation, or a disability. Public policy changes, for example, affordable child care, would enable many of these people to work. In addition, in 2020, another 12.2 million people who worked full-time all year–one out of nine full-time workers–had annual earnings below $26,496, the government’s meager poverty standard for a family of four.
We need a new set of employment statistics that includes each of these four groups. Here is an example for 2020:
| Officially Unemployed Workers | 12.9 Million |
| Involuntary Part-Time Workers | 7.2 Million |
| Non-Job Seekers Who Want a Job | 7.1 Million |
| Full-Time Year-Round Workers Earning less than Poverty Level* (for a family of four, 2020: $26,496) | 12.2 Million [Estimate] |
| TOTAL | 39.4 Million |
*Source: estimated from Current Population Survey Annual Social and Economic Supplement, Bur. of the Census, 2021) and Poverty thresholds
It should be noted that these numbers do not include our extraordinary jail and prison population. At the end of 2020, there were an estimated 1.8 million people in state and federal prison, despite a substantial drop. [1] That number grew rapidly in the 1980’s and 1990’s, peaking in 2008, made up disproportionately of young Black men. If inmates were counted as unemployed, the official jobless rate would rise by roughly a 1 percentage point.[2]
Even these adjusted unemployment data do not capture a full picture of the job market now. This would have to include the labor force participation rate [LFPR], the labor force as a share of the civilian noninstitutional population. For example, the rate for prime-age men [25 to 54 years old], 91.1% in January 2008, declined to 88.0% in April 2014 after the financial crisis of 2007-8, and recovered only to 89.3 in early 2020 and plunged with the virus [86.4%-4/20]. The latest shows some recovery to 88.3 [7/21]. The rate that includes both men and women 16 years and older, reached a peak of 67.3% in early 2000. It plunged to 62.4 in September 2015, and recovered modestly, to 63.3% in January 2020 before plunging with covid. It is now 61.6. [9/21][4]
While the BLS does report the wide differences in unemployment by sex, age, race, ethnicity, education, and region, these are not often given much attention. Some, such as race, disability or youth, are very significant. To illustrate, in September 2021, when overall unemployment was 4.8%, the black rate was 7.9%; for those with a disability, 9.0%; for teens, 11.5%; and for black teens, 15.7%. Current data are reported in our monthly unemployment report.
Contrary to a widespread misperception that all of the unemployed collect unemployment insurance, fewer than 30% do. [5] And on average, unemployment benefits replace less than half of an unemployed worker’s lost wages.[6] (Official unemployment figures come from a sample survey of the population, not from unemployment insurance offices.)
After rising to 10% during a month in 2009 after the fiscal crisis, unemployment finally fell to levels below 4%. It is 4.8% now [9/21]. Though the Federal Reserve’s mandate is to reduce both unemployment and inflation, the latter has been privileged. Chronic fears of inflation of both the Fed and the financial sector have led to higher interest rates and dampened economic activity, often long before excess capacity and unemployment have been erased. Dallas Federal Reserve President Richard Fisher was already worrying about inflation as early as 2014, when unemployment was 6.1%. [7 and Uncommon Sense 3.] Note that asset inflation, like a booming stock market or rising home prices, gets only congratulation.
Corporate chiefs and financial elites fear that lower unemployment rates will increase worker power to get higher wages. However, far from wage increases, there has been a serious and unfair wage lag that has contributed to rising inequality: wage increases have fallen far short of productivity increases, benefiting corporate profits. The Economic Policy Institute has estimated that “productivity has grown 3.5 times as much as pay” between 1979 and 2020. [8] It was only in 2019 that real average hourly earnings rose above their level in 1975—but by less than 1 percent. Workers are finally beginning to receive higher wages. In October 2021, they were nearly 6 percent above 1975—still inadequate.
After decades of lagging pay and benefits, job insecurity, and employer monitoring, workers have finally begun to resist. For example, the quit rate has risen, as have strikes. The change has resulted partly from worker reluctance to return to unsafe workplaces, and worker shortages with economic recovery.
Workers deserve a job guarantee mandating that everyone who wants a job has one and that all jobs pay a living wage. Congress (2019-2020) proposed a job guarantee HR 1000 as does the movement underway to promote a federal job guarantee. Recognizing the burden of unemployment and low earnings borne by millions of Americans, we must develop policies which guarantee decent, living wage Jobs for All!
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[1] https://www.vera.org/publications/people-in-jail-and-prison-in-2020 and https://www.bjs.gov/content/pub/pdf/p16.pdf
[2] “…if you add to it [official unemployment +discouraged+involuntary part-time] the millions of people that you have in jail in the U.S. — which is four times the amount of any civilized country as a share of population — than unemployment is probably closer to 20 percent. And that’s just among the average population. For minorities, the youth, or unskilled people that don’t have a high school degree, the number is closer to 30 percent.” Nouriel Roubini interview, Foreign Policy, 10/11. See also http://www.russellsage.org/blog/how-incarceration-data-affects-employment-figures and America has locked up so many black people it has warped our sense of reality, Guo, Wash. Post, 2/16
[3] “The participation rate is the share of the population 16 years and older working or seeking work.” https://fred.stlouisfed.org/graph/?graph_id=198255 BLS See “Is the Decline in the Labor Force Participation Rate During This Recession Permanent?”
[4] https://fred.stlouisfed.org/graph/?graph_id=581914 and https://fred.stlouisfed.org/graph/?g=lrqw
[5] During recessions, more of the unemployed receive benefits as job losers are a larger fraction of the unemployed, but even with extended unemployment benefits and other special programs, most of the officially unemployed don’t receive benefits. https://oui.doleta.gov/unemploy/images/carousel/application_and_recipiency.png https://oui.doleta.gov/unemploy/chartbook.asp https://www.dol.gov/ui/data.pdf https://oui.doleta.gov/unemploy/claims.asp
[6] That rate for 2020 was less than 45%. https://oui.doleta.gov/unemploy/ui_replacement_rates.asp
[7] “The debates over full employment and Federal Reserve policy are generally dominated by the interests of the minority who worry more about inflation and asset values than those who worry about jobs and paychecks.” Jared Bernstein,Wash. Post.
See also Dallas Federal Reserve President Richard Fisher on Wages.
[8] https://www.epi.org/productivity-pay-gap/
See monthly updates on unemployment statistics on this web site. For further information about employment statistics, see Sheila Collins, Helen Lachs Ginsburg and Gertrude Schaffner Goldberg, Jobs for All: A Plan for the Revitalization of America, Apex Press, 1994, pp. 40-48 and 59-61.
Editor: June Zaccone, Assoc. Prof. [Emerita] of Economics, Hofstra University.