Employment Statistics: Let’s Tell the Whole Story

UNCOMMON SENSE 4 © revised October 2018

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 2017, this official unemployment averaged 4.4 percent, representing 7.0 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 5.2 million involuntary part-time workers who wanted but weren’t able to get full-time employment, as well as another 5.5 million people who wanted jobs but were not actively seeking work. Of that group, 2.2 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 2017, another 17.1 million people who worked full-time all year–more than one out of seven full-time workers–had annual earnings below $25,094, the government’s meager poverty line 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 2017:  

Officially Unemployed Workers    7.0 Million
Involuntary Part-Time Workers    5.2 Million
Non-Job Seekers Who Want a Job    5.5 Million
Full-Time Year-Round Workers Earning less than Poverty Level* (for a family of four, 2017: $25,094)  17.1 Million [Estimate]
TOTAL  34.8 Million 

*Source: estimated from Current Population Survey 2017 Annual Social and Economic Supplement, Bur. of the  Census, 9/18) and Poverty thresholds

It should be noted that these numbers do not include our extraordinary jail and prison population. At the end of 2017, there were an estimated 1.5 million people in state and federal prison. [1] That number grew rapidly in the 1980’s and 1990’s, peaking in 2008, made up disproportionately of young, unskilled minority men. At the end of 2015, “9.1 percent of young black men (ages 20–34) were incarcerated.In December 2016, about 2.5% of black male U.S. residents were in state or federal prison. If inmates were counted as unemployed, the official jobless rate would rise by nearly 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 has not recovered [88.6%-9/18].  The rate for both men and women 16 years and older, reached a peak of 67.3% in early 2000. After declining slightly, it then plunged to 62.3 in April and November 2015, and has recovered only modestly, to 62.7% in September2018. [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 2018, when overall unemployment was 3.7%, the black rate was 6.0%; for those with a disability, 7.3%; for teens, 12.8%; and for black teens, 19.3%. Current data are reported in our monthly unemployment report.

Contrary to a widespread misperception that all of the unemployed collect unemployment insurance, a majority of them do not. [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 has fallen to levels below 4% [now 3.7%-9/18].  Despite the chronic Federal Reserve and financial sector fears of inflation, this is not very visible.  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.]

Corporate chiefs and financial elites fear that lower unemployment will increase worker power to get higher wages. However, average hourly earnings have hardly risen–their purchasing power in 2017 barely exceeds their level in 1974.   Even if unemployment is below 4 percent, that’s not good enough. Millions remain unemployed.  It is also important to remedy the serious and unfair wage lag. We must work for a job guarantee, one that mandates that everyone who wants a job has one and all jobs pay a living wage. Proposals include HR 1000 and the movement underway to promote a federal job guarantee. Recognizing the burden of unemployment and low earnings, we must develop policies which guarantee living wage Jobs for All!
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[1] 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=316648https://fred.stlouisfed.org/graph/?graph_id=198255&rn=68 and https://data.bls.gov/PDQWeb/ln

[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, fewer than half of the officially unemployed received benefits: only 26 per cent in August 2014. Congress let emergency federal unemployment insurance expire at the end of 2013, so the long-term unemployed no longer  it. http://www.dol.gov/ui/data.pdf and https://workforcesecurity.doleta.gov/unemploy/DataDashboard.asp http://workforcesecurity.doleta.gov/unemploy/wkclaims/report.asp

[6] That rate for 2018 was 46%.

[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.

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.