This article discusses what the real unemployment rate would
be if it took into account everyone who is actually unemployed. Currently, the latest job report does not
include the half a million people who dropped out of the labor force, those who
cannot work because of disabilities, and those that are hardly working and
would take a full time job if offered.
Officially, there are 11,742,000 unemployed Americans, a
jobless rate of 7.6%. If you included the 803,000 discouraged workers, the 8
million involuntary part time workers, and the 8.9 million Americans who
receive disability benefits, the total would be 18.5 million unemployed and a
jobless rate of 11.7%; an increase of over 4% and almost 7 million individuals.
Almost one in eight Americans who want to work is not because they cannot find
employment.
If an individual has
not worked in the past four weeks but is actively seeking work, they are considered
unemployed. The three main types of unemployment, frictional, structural, and
cyclical, are lacking in describing all the different ways someone should be
considered unemployed. Those who are considered unemployed are more than just
those who are transitioning between jobs,
lack the skills needed for the available jobs, or there is not enough
demand to provide jobs to those who want one.
If an individual has worked for pay in the last 4 weeks, they
are considered employed. 0-30 hours is part time, 30 and above is full time.
The issue I have is that there is a very wide range of weekly hours worked that
categorizes and individual as part time. I do not believe an individual who
works say 8 hours a week should be considered employed if they are like the
engineer in the example who picked up any hours they could get their hands on
at a grocery store.
When I personally think of individuals who are unemployed, I
do take into account the individuals who have looked for so long that they have
given up. I also don’t consider an individual who works between 30 and 35 hours
a part time worker. I work 40 hours a week and can attest to the fact that
regardless if there are 5 to 10 less hours of work, it is still a significant
amount of time dedicated to work each week.
Clearly this is not an analysis to make suggestions that the
components of the unemployment need to be changed, but rather that I agree with
the article’s statement that the actual rate may be worse than the numbers
indicate. I would like to think that there are only 7.6% of Americans who do
not have a job. Unfortunately, that statistic of 7.6% only indicates the
percentage of individuals who are actively searching for full time employment.
Your article is very enlightening to the fact that more than 7.9% of Americans are actually unemployed. Before taking our macroeconomics class, I had no idea that the term “unemployed” included different kinds of people, or did not include for that matter. I agree with you that discouraged workers should absolutely be considered when calculating the unemployment rate. If anything, they are the worst type of unemployed people because it has been such a long road of searching for work that they have given up hope- that’s a bad reality to be living in.
ReplyDeleteMy dad is currently unemployed and was fortunate enough to get into a government program that is paying for him to go back to college for a year to get a new degree for a new job, different from the one he had for 20+ years. It is a very tedious process of filling out applications, talking to the state unemployment office, consistently searching job ads, and filling out the required forms to show that he is, indeed, still looking for work. It is no wonder people give up searching when there are little jobs to be had right now.
You talk about how people who are part-time are still considered employed and that you disagree with that in some cases. Do contract workers count as employed or unemployed since they do not work every day unless they are working on, say, laying down a new floor or constructing parts of a house? I would imagine that they are technically employed but wonder how that works out in the calculation of the unemployment rate. Continually, while I agree with you that people who are just grabbing any hours of work that they can get seem to not fit the employed category, I think it would be hard to differentiate between people who are grabbing random hours because they can’t find a full time job or because they choose to. I guess that’s the reason we have the category of “part time for economic reasons.” This means that the people are part time because they can’t find a full time job, not because they have to. Again, I agree with you that it’s a fuzzy area but am also at a loss as to how to fix it.
Overall, your article and analysis is very enlightening and you obviously found a great article that exposes the other side of the unemployment rate. Almost 12 million and 18.5 million are two very different numbers and something that should be exposed when considering the real rate of unemployment in the country.
As an afterthought- do you think that the numbers in your article/analysis are considered when thinking about the natural rate of unemployment?