http://www.slate.com/id/2202879/
The 20-Hour Workweek
The unemployment rate seems low. That's because it's not counting all
those underemployed workers.
By Daniel Gross
Posted Wednesday, Oct. 22, 2008, at 3:59 PM ET
It's hard to overstate the poor numbers coming out of Wall Street in
recent months. But could it be that we're overstating the gravity of
the situation? As job losses have mounted and consumer confidence has
plunged, policymakers, news organizations, econo-pundits, and even
some of my Slate colleagues have noted that the unemployment rate,
which rose to 6.1 percent in September, seems to be at a
nonrecessionary, noncatastrophic, low level. The unemployment rate is
still below where it was in 2003; and between September 1982 and May
1983, the last very deep recession, it topped 10 percent. (Go here
for a chart and historical data).
But maybe the employment data are much worse than they seem. In the
past year, the two key measures of employmentthe unemployment rate
and the payroll jobs figurehave been poor but not awful. The
unemployment rate has risen from 4.5 percent a year ago to 6.1
percent. And in the first nine months, 760,000 payroll jobs were
lost. This is unwelcome but not catastrophic. So why do things feel
so bad? It's not because, as Phil Gramm suggested, we're a nation of
whiners. And it's not a matter of columnists and spin doctors shading
the numbers to make things look worse.
Rather, these two figures are undermeasuring the weakness in the
labor market. By some measures, in fact, the job situation is worse
than it has been at any time since 1994.
Here's why. Back in the 1990s, the Bureau of Labor Statistics
recognized that in a changing economy, in which outsourcing,
self-employment, and contracting were becoming more commonplace, the
traditional methods of measuring unemployment and job growth might
not accurately portray the economic situation. And it knew its
methodology had some quirksthe unemployment rate doesn't account for
people who have given up looking for jobs, or who have taken
themselves out of the work force. So since 1994, the BLS has been
compiling alternative measures of labor underutilization. There are
many different varieties of labor underutilization. There are
marginally attached workers: "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." There are discouraged workers, a subset of the marginally
attached crowd, who have "given a job-market related reason for not
looking currently for a job." There are people who work part-time
because they can't findor their employer can't providefull-time
work. There are people who have left the work force entirely. Neither
the unemployment rate nor the payroll jobs figure captures the plight
of many of these folks.
And the alternative labor underutilization measures show a lot of
stress. The data on people not in the work force show the number of
people not looking for work because they're discouraged about finding
jobs has risen from 276,000 in September 2007 to 467,000 in September
2008up 70 percent. The percentage of people unemployed for more than
15 weeks stood at 2.3 percent in September 2008, up from 1.6 percent
in September 2007, a rise of nearly 45 percent. But the most
troublesome is the U6. The U6 is sort of the summa of job angst, a
shorthand tally for the aggregate of job-related frustration.
(Moneybox covered some of this terrain back in 2004.) To compile the
U6, the BLS takes the number of unemployed, plus all marginally
attached workers, plus all of those employed part-time for economic
reasons, and then calculates that total as a percentage of the sum of
the entire civilian labor force plus marginally attached workers.
The U6 in September rose to 11 percent, its highest level since the
data series started in 1994 and significantly higher than it was in
the last recession, in 2001. The ratio between the U6 and the
official unemployment rate has remained relatively steady over the
last several years. But that means that as the unemployment rate has
risen, so too has the portion of the population suffering from other
types of work deficits. Three years ago, when the unemployment rate
was 5.1 percent, an additional 3.9 percent of the labor force fell
into one of those other underutilized categories. Last month, with
the unemployment rate at 6.1 percent, an additional 4.9 percent of
the labor force was underutilized. (See charts comparing the
unemployment rate and the U6 rate.) Add it up, and more than 10
percent of American workers are essentially not contributing
full-time to their families' well-being and to that of the economy at
large. The unemployment rate may still be historically low, but the
underutilization is historically high.
Daniel Gross is the Moneybox columnist for Slate and the business
columnist for Newsweek. You can e-mail him at [EMAIL PROTECTED] He
is the author of Pop! Why Bubbles Are Great for the Economy.
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