Numbers Games: Undercounting Unemployment and its Consequences
Shriberg, Amy Burke
ALTHOUGH unemployment data from the U.S. Bureau of Labor Statistics (BLS) have been less discouraging of late, the news would be far worse if the media reported the total number of...
...Adjustments are made to correct for this under-coverage, yet the assumption is that members of the cohort left out of the survey resemble memDISSENT / Winter 2004 • 69 UNEMPLOYMENT NUMBERS bers of the cohort who responded to the survey...
...Instead, the official unemployment rate reflects a rather narrow definition of unemployment and obscures debates that we should be having about the overall health of the U.S...
...Also left out are those working part time even though they would prefer full-time employment...
...If more of our citizens understood how many more of us are unemployed, even during the best of times, support for a permanent public jobs program— modeled perhaps on Roosevelt's WPA—might grow...
...Moreover, certain segments of the population have been disproportionately harmed by our current jobless recovery—although average job searches have lengthened across subgroups and regardless of individuals' educational background and previous work experience...
...It was originally administered by the Works Progress Administration (WPA), a New Deal work relief program that ceased to exist in 1943, and it is now cosponsored by the U.S...
...The false idea that jobs await those who seek them undergirds the new welfare system, Temporary Assistance for Needy Families, which requires most recipients to work to remain eligible for benefits...
...worked in their own business, profession, or on their own farm...
...In 2002, the U.S...
...This marked a slight decrease from June's numbers, when the official unemployment statistic reached a more than nine-year high of 6.4 percent or 9.4 million individuals...
...These would-be workers, often the long-term unemployed, are left out of the official number if they have not sought work actively in the reference month—even though they may have spent months on a fruitless job search before giving up...
...Mainstream media devote little attention to the limitations of the official unemployment rate, especially during periods of growth...
...Thus, when the official unemployment number is relatively low—as it was during the recent boom years— those interested in discussing poverty and the troubles confronting lower income Americans face an uphill battle...
...On top of that, the definition of "unemployed" has changed over the years to include fewer and fewer individuals...
...During recessions, articles examining deeper economic issues may appear, but they almost never address just how many Americans are left out of the count—and how many others aren't doing well by other measures...
...We get an even better picture of the very large number of Americans facing economic hardship if we add in those working full time yet earning poverty level wages...
...The depression firmly established the critical importance of more precise data, and the government instituted the monthly Current Population Survey in 1940...
...That figure amounted to 4.9 million individuals in October...
...statistics is our failure to measure job availability for purposes of comparison with unemployment statistics," as Harvey says...
...Bureau of Labor Statistics (BLS) have been less discouraging of late, the news would be far worse if the media reported the total number of Americans currently out of work...
...And if the number of Americans who are under employed or who work full time but earn poverty wages were reported widely on a regular basis, the U.S...
...But this poses severe problems for liberals and leftists because many contemporary policy debates, such as those about welfare reform, unemployment benefits, tax cuts, and more, revolve around an often false understanding of the economy and the opportunities it provides during periods of economic expansion and recession...
...For instance, young black males are the most likely to be under- covered in the monthly CPS survey used to calculate the official unemployment rate...
...To calculate hidden unemployment, the coalition includes BLS figures for those working part time because they can't find full-time employment...
...AN ORGANIZATION that works to highlight the discrepancy between the official unemployment rate and what is often called hidden unemployment is the National Jobs For All Coalition (NJFAC), which posts unemployment data each month after the BLS data are made public...
...The study, Left Behind in the Labor Market, documents a 12 percent, or six hundred thousand person increase, in the number of unemployed youths sixteen to twenty-four years old since 2000...
...By including those who worked as little as an hour during the reference week, the number of employed individuals is already inflated...
...What is often overlooked is the perhaps more significant issue of whether there are enough total jobs, whether good or bad, to go around...
...Individuals are classified as employed if they did any work at all as paid employees during the reference week [working as little as an hour qualifies...
...Even during the most recent period of growth, the United States lost more than 2.4 million manufacturing jobs...
...It is time to shift the terms of the debate, so that policymakers address the needs of all Americans in search of decent work...
...It makes sense that the government would calculate the unemployment rate in such a way as to minimize the number of unemployed...
...The CPS is a sample survey of (currently) sixty thousand households from which the official unemployment rate is derived...
...In addition, it also reports the number of people who want jobs but who are not included in the official statistic because they do not qualify as actively looking...
...AMY BURKE SHRIBERG is a writer living in Ohio...
...Liberals might also be able to revive discussions of a full-employment agenda...
...Arguments about how to calculate the nation's unemployment rate aren't new, but the issue has fallen off the public's radar screen in recent years...
...During the 1980s and 1990s, the number of individuals held in federal and state prisons more than tripled, increasing from about 320,000 in 1980 to 1.3 million in 2000...
...People are also counted as employed if they were temporarily absent from their jobs because of illness, bad weather, vacation, labor-management disputes, or personal reasons...
...One negative consequence of our system of officially underestimating the number of unemployed is that many people perceive the unemployment rate as synonymous with the number of jobs needed to employ everybody who wants to work...
...Many of the unemployed are ineligible for benefits...
...Although the decrease may mark the beginning of an economic turnaround, growth remains sluggish in many sectors...
...The government first began collecting simple information about the nation's unemployed in 1880, but it wasn't until the Great Depression that efforts to collect unemployment statistics began in earnest...
...To be classified as officially unemployed, individuals must meet the following Bureau criteria: They had no employment during the reference week...
...The welfare reform bill enacted by Congress in 1996, for instance, is predicated on the notion that those in need should have to work, but there was little significant debate about whether the economy could provide enough jobs, especially with decent wages, to those forced off the nation's welfare rolls...
...Combining the official unemployment rate with these additional figures provides a more realistic picture of the U.S...
...manufacturing sector, which once provided the bulk of such jobs for Americans without college degrees, has continued to be pummeled by globalization and the movement of those jobs abroad...
...economy...
...Reliance on the official rate also stymies discussion of an expansive full-employment policy that would take into account the uncounted unemployed and the under employed as well...
...Even in periods of general prosperity, there are not enough jobs to satisfy the needs of everyone who wants to work, and the burdens of this joblessness tend to fall disproportionately on disadvantaged population groups," says Rutgers University law professor Philip Harvey in "Responding to Rising Unemployment: Can We Afford Jobs for All...
...they were available for work at that time...
...The official unemployment rate fell from about 7.5 percent in 1992 to a thirty-year low of 4 percent in 2000...
...Although he can't prove it one way or the other, Robison's assumption is that some of the under-covered groups experience at least slightly higher rates of unemployment than their covered counterparts...
...Such low unemployment precluded discussions of public jobs programs and ongoing job shortages, as employ70 n DISSENT / Winter 2004 ers often scrambled to fill positions, even though many Americans remained unemployed or underemployed at the same time...
...For starters, those interviewed are never asked directly whether they are unemployed...
...economic outlook would appear worse still...
...economy: it increases the number of unemployed from 6.0 percent to 12.2 percent or 18.5 million persons for October, according to the coalition (the BLS doesn't calculate that figure although it provides the components to do so...
...Several changes were made in 1967 and 1994 that winnowed the number of those officially out of work—most notably by excluding discouraged workers, who have stopped looking for work—from the labor force...
...unemployment rate was 6.0 percent or 8.8 million individuals...
...In October, 4.8 million Americans fell into that category...
...The government does collect and publish this information, so it is there for people to find (if you know where to look for it), but it is almost never reported...
...But they are not the only group inaccurately represented in the survey...
...Debates about joblessness in nonrecessionary times usually revolve around how jobs are distributed among the population of job seekers...
...and they made specific efforts to find employUNEMPLOYMENT NUMBERS ment sometime during the 4-week period ending with the reference week...
...There is no way for statisticians at the Census and BLS to know for certain whether this is true, according to Ed Robison, a BLS statistician...
...AS LONG AS there is a significant job shortage, it makes more sense to discuss how to increase the total number of jobs available rather than devoting scarce resources to trying to equalize the distribution of an insufficient number of jobs among different groups of Americans...
...So how does the BLS define unemployment...
...Most Americans accept that the unemployment statistic is what it purports to be: an accurate assessment of those looking for work...
...This is unlikely while the official unemployment rate disguises the depth of unemployment and under employment plaguing the U.S...
...The U.S...
...Policymakers and politicians consider low unemployment almost infallible evidence of economic health...
...To correct this, the BLS should measure the number of jobs that employers are ready and willing to fill...
...The depression also gave birth in 1935 to our unemployment insurance system, which continues to provide benefits for unemployed Americans lucky enough to qualify...
...Rather than boosting spending on youth proUNEMPLOYMENT NUMBERS grams, however, Congress cut more than three hundred million dollars last January for job training and youth employment programs...
...Census Bureau and the BLS...
...The system operates largely at the state level but with federal oversight, and its benefits only partially replace wages...
...Although efforts are made to correct for under-coverage, members of certain groups are more likely than others to be left out of census surveys...
...White-collar jobs, such as computer programming positions, are increasingly being sent overseas as well, which raises further questions about the ability of the U.S...
...RATHER THAN developing a more broadly encompassing measure of unemployment, the BLS actually has narrowed the definition of those counted as officially unemployed over the years...
...A recent study by Northeastern University's Center for Labor Market Studies reveals that there are roughly 5.5 million young people who were out of school but jobless in 2002...
...And between 1980 and 2000 the total jail and prison population together increased from 503,586 to 1,937,482—a 284.7 percent increase, according to U.S...
...The official unemployment rate has another flaw as well, namely that it is subject to the same under-coverage problems as all surveys are—and to any undercounting problems associated with the census from which CPS population controls are derived...
...or worked without pay at least 15 hours in a family business or farm...
...In addition, the official unemployment figure excludes the incarcerated population from the labor force...
...Many middle- and lower income Americans have a visceral understanding that the economy is worse than our official economists admit, but their knowledge is not reflected in the nation's unemployment statistics...
...It is interesting to note first how the BLS defines employment...
...Indeed, there is plenty of evidence that even in good times a low unemployment rate masks an underlying job shortage, especially if we are talking about jobs that offer individuals with a high-school diploma or less access to family-supporting wages and benefits...
...At the onset of that major calamity, estimates of the nation's unemployed were unofficial and varied, often provided by private agencies...
...That leaves out many people without jobs who are available and want to work...
...Persons laid off from a job and expecting recall need not be looking for work to be counted as unemployed...
...The BLS has recently begun a new survey, the Job Openings and Labor Turnover Survey, which is designed to begin assessing the number of job openings in the country...
...In October (the latest figures available at this writing), the official U.S...
...DISSENT / Winter 2004 n 71...
...trade deficit soared to its highest level of $435 billion...
...Based on Census Bureau data for the year 2000, 16.8 percent of those working fulltime, or 16.9 million individuals, earn less than the official poverty rate for a four-person family...
...economy to provide enough jobs for its citizens...
...Bureau of Justice statistics...
...economy and its ability to provide decent, familysupporting jobs to all its citizens...
...Even during the boom years of the mid- and late 1990s, income inequality expanded for many Americans, and lower income Americans with less education enjoyed fewer opportunities for meaningful employment than 68 n DISSENT / Winter 2004 the headlines about record low levels of unemployment suggested...
...The more important failing in the U.S...
...In other words, about one in seven men and one in four women, employed full time all year, earned less than poverty level wages for a family of four...
...During recent boom years, unemployment hovered at such low levels that economists began redefining what they considered to be the natural rate of unemployment, or the non-accelerating inflation rate of unemployment (the NAIRU), which is the amount of unemployment considered necessary to keep inflation stable...
...While this is a start in the right direction, Harvey argues that more refined statistics are needed to evaluate how many fulltime jobs are needed to employ all who want such jobs...
...According to the Economic Policy Institute (EPI), only 38 percent of currently unemployed workers qualify for unemployment benefits...
...Inaccurate information about just how many Americans needed jobs made it more difficult for New Dealers to craft coherent employment policies...
...Given the statistics as they are, and public knowledge about the economy as it is, we are left with a president and Congress whose only job creation proposals revolve around additional and continued tax cuts for the affluent and whose time in office has already coincided with the loss of at least 2.5 million jobs...
Vol. 51 • January 2004 • No. 1
