Employment Statistics: Let’s Tell the Whole Story

UNCOMMON SENSE 4 © rev. October 2014

By Helen Lachs Ginsburg, Economics, Emerita, Brooklyn College of the City University of New York, Bill Ayres, Director, World Hunger Year, 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 2013, this official unemployment averaged 7.4 percent, representing 11.5 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 7.9 million involuntary part-time workers who wanted but weren’t able to get full-time employment, as well as another 6.4 million people who wanted jobs but were not actively seeking work. Of that group, 2.4 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 2013 (the most recent year for which such data are available), another 18.5 million people who worked full-time all year–more than one out of six full-time workers–had annual earnings below $23,824, 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 2013:  

Officially Unemployed Workers   11.5 Million
Involuntary Part-Time Workers    7.9 Million
Non-Job Seekers Who Want a Job    6.4 Million
Full-Time Year-Round Workers Earning less than Poverty Level* (for a family of four, 2013: $23,834) 18.5 Million [Estimate]
TOTAL 44.3 Million 

*Source: estimated from Current Population Survey 2014 Annual Social and Economic Supplement, Bur. of the  Census, 9/2014) and Poverty thresholds

It should be noted that these numbers do not include the vast jail and prison population (2.2 million in 2014) [1] that grew rapidly in the 1980’s and 1990’s, peaking in 2008, made up disproportionately of young, unskilled minority men. As of 2014, one in 112 American adults was incarcerated. In 2014, 6 per cent of Black men in their thirties were in prison. If inmates were counted as unemployed, the official jobless rate would rise by nearly 1½ percentage points.[2]

Even these adjusted unemployment data do not capture a full picture of the job market now. This would have to include the decline in the overall labor force participation rate [3] since its peak during early 2000. For example, the rate for prime-age men [25 to 54 years old] has been close to its postwar minimum: for all men, it decreased from about 92% in the mid 1990s, to 88.4% in August 2014.[4] For Black men, it was then 82.0%, recovered from its postwar minima during the fiscal crisis, but is not back to pre-crisis levels.

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 August 2014, when overall unemployment was 6.1%, the black rate was 11.4%; for those with a disability, 12.8%; for teens, 19.6%; and for black teens, 32.8%. 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.)

Unemployment fell after 1992 to a three-decade low of 4 per cent in 2000 but has risen sharply since then, throwing more workers onto the scrap heap. Historically, elites have preferred higher unemployment because of the unfounded belief that lower unemployment necessarily means higher inflation. [7] [See Uncommon Sense 3.] Though lower unemployment in the 1990’s was accompanied by lower inflation, this belief is likely to be resurrected if unemployment starts to fall to the lows of the late 1990’s.

These elites also fear that lower unemployment leads to more worker power and higher wages. Average hourly wages in the private sector did rise modestly during the late pewstates1990’s, and that was good news. But they are still below their 1973 peak in purchasing power.[8] So even if unemployment falls again to 4 percent, that’s not good enough. We can’t stop before everyone who wants a job has one and all jobs pay a living wage. Until we recognize the extent of unemployment and low earnings, we will not develop the programs and policies to guarantee living wage Jobs for All Americans!
[1] Bureau of Justice Statistics 2012] Yearend 2012, 6.9 million people, or 1 in 35 adults, were under “correctional supervision”–probation, jail, prison, or parole.

[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.” BLS See “Is the Decline in the Labor Force Participation Rate During This Recession Permanent?”

[4] https://research.stlouisfed.org/fred2/graph/?graph_id=244224&category_id=

[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 receive it. http://www.dol.gov/ui/data.pdf and http://workforcesecurity.doleta.gov/unemploy/wkclaims/report.asp

See Historically Small Share of Jobless People Are Receiving Unemployment Insurance

[6] That rate for 2013 was 46.64%.

[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] http://www.gpo.gov/fdsys/pkg/ERP-2014/pdf/ERP-2014-table15.pdf

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.