The jobless rate is much worse than you think

Posted Oct. 29, 2009, at 12:40 a.m.

Numbers explain distress in recovery without jobs

Some of the bad news about U.S. employment is widely known. Many people know that since this long recession began in December 2007, we have lost millions of jobs — 7 million, in fact. Many also know that last month’s unemployment rate was about 10 percent, double the rate at the start of the recession.

But these numbers don’t fully portray the hardships afflicting many American workers.

Let’s start with the unemployment data. The Bureau of Labor Statistics, the agency that compiles U. S. labor information, defines unemployment quite strictly: People are counted as unemployed only if they looked for work in the last four weeks. But the BLS also asks people without a job whether they want one and whether they actually are available for work, even if they have not looked in recent weeks. In the BLS September survey, this added more than 2 million people to the 15 million who were strictly unemployed, for a total of more than 17 million. Among those who want a job, but who do not have one, many are “discouraged workers” — they did not look for a job in the previous four weeks because they believed no jobs were available.

Further, the September survey data show that more than 9 million part-time workers wanted a full-time job, but could not find one; these are “involuntary part-time workers.” Adding all these groups of workers together, the BLS arrived at 17 percent as the rate of underutilized workers; BLS calls this rate of underutilization the “U-6” rate.

So one out of six American workers wants work but cannot get it, or wants full-time rather than part-time work, but cannot get it. Worse still, the U-6 rate has been increasing rapidly: It is now almost twice as high as it was in late 2007.

These numbers translate into real distress. They help explain why many people’s homes are in foreclosure; why many who need medical attention are going without it; why some people in their forties are prematurely drawing down their retirement savings; and why teenagers who thought they were college-bound are still at home.

Still, none of these figures takes into account another type of hardship: The unemployed are staying unemployed longer. When the recession began, only 1.3 million of the unemployed had been without work for 27 weeks or longer; last month, the figure was 5.4 million. Common sense tells us that the longer people go without work, the greater their burdens.

It’s easy to get the whole story about labor market distress. You can access all these figures, and more, on the BLS web site, starting with its home page, at www.bls.gov. Or go to www.bls.gov/news.release/pdf/empsit.pdf for the latest news release on labor conditions.

Details about Maine’s employment conditions also are available, and they also show hardship. The state has lost 25,000 jobs since December 2007, and its unemployment rate has risen from 4.7 percent to 8.5 percent. And just as in the U.S. as a whole, Maine’s labor underutilization rate is much higher than its unemployment rate.

Still, rays of hope are faintly visible around the edges of this gloomy picture. First, the worsening of employment conditions have slowed down in recent months. For example, we lost an average of 700,000 jobs a month in the first quarter of this year, but only 250,000 a month in the most recent quarter.

Also, the recession may be about to end. Both home sales and the Conference Board’s leading economic indicators are now rising steadily, and some economists think the gross domestic product recently stopped falling and may now be rising slowly.

Yet these rays are indeed faint. Often, the employment market keeps on getting worse for one to two years after the broad economy starts to recover, so the employment picture could remain dreadful until late 2010 or sometime in 2011.

Here’s the bottom line: Even if a recovery is now under way — and that’s a big “if” — it likely will be a recovery without jobs for many, many workers in Maine and in the U.S.

Edwin Dean, an economist and seasonal resident of Vinalhaven, writes monthly about economic issues.

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