How Many People Are Really Unemployed? What’s The True Percentage?
Every month the headlines include the latest unemployment figures. Unfortunately, the headlines and what actually is happening are often not the same.
To understand what’s going on you first have to grab your very own copy of the monthly federal report issued by the Bureau of Labor Statistics. You can always get the most-recent release because the BLS uses the same link each month. Just go to the latest unemployment numbers for yourself.
For March 2009 the government says that “nonfarm payroll employment continued to decline sharply in March (-663,000), and the unemployment rate rose from 8.1 to 8.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Since the recession began in December 2007, 5.1 million jobs have been lost, with almost two-thirds (3.3 million) of the decrease occurring in the last 5 months. In March, job losses were large and widespread across the major industry sectors.”
In total, says the government, it found 13.2 million people who were unemployed, 8.5 percent of the workforce in March 2009.
The Self-Employed & Farmers
Notice that the news talks about nonfarm payroll employment. In other words, it does not include the self-employed or farmers. How big a deal is this?
- The government says that 10.4 million people are self-employed. This is equal to 6.9 percent of the 154 million people in the civilian labor force.
- Farmers about 2 percent of the population, according to the Agriculture Department. That’s equal to roughly 3.8 million workers.
In total we have 14.2 million people (10.4 million plus 3.8 million) who are not considered when unemployment numbers are tallied.
People Not In The Labor Force
Another excluded category involves persons not in the labor force.
“About 2.1 million persons (not seasonally adjusted) were marginally attached to the labor force in March,” says the BLS, “754,000 more than a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”
In other words, you have to be actively looking for a job to be counted as unemployed.
Not Looking For Work
Lastly, we come to those who are not counted because they are discouraged workers. The government says that “among the marginally attached, there were 685,000 discouraged workers in March, up by 284,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The other 1.4 million persons marginally attached to the labor force in March had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.”
The Real Level Of Unemployment
There’s another measure which does not fit within the government standards, the under-employed. Who are these folks? In general terms the underemployed are people with jobs, but not the jobs they want and not the jobs which fully reflect their skills, experience and training.
People are often under-employed, especially when the unemployment rate rises because workers are logically concerned that if they leave their present employer they will be unable to get a replacement job with equal or better pay and benefits. The result is that they stick where they now work rather than look for a better situation.
The bottom line: Official unemployment figures tend to substantially understate actual workplace trends. For instance, in the month of March 2009 we had 13.2 million officially unemployed and 2.1 million without jobs but not included among the officially out-of-work. That’s 15.3 million people. Relative to a workforce with 154 million people that’s an unemployment rate of 9.93 percent — not counting the self-employed who have lost work, farmers who are not working and the lost economic potential of the under-employed.
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