The real unemployment rate? 16.6%
The Labor Department's statistics don't include the underemployed and those who have stopped looking for work. This alternative measure creates a much higher number.
It's bad enough that the nation's jobless rate is 9.7%. But the real national employment rate is even higher than the U.S. Department of Labor's May figure shows.
The official unemployment index, based on a monthly survey of sample households, counts only people who reported looking for work in the past four weeks. It doesn't account for part-time workers who want to work more hours but can't, given the tight job market. And it doesn't include those who have given up trying to find work.
When the underemployed and the discouraged are added to the numbers, the unemployment rate rises to 16.6%. The Bureau of Labor Statistics, a unit of the Labor Department, began tracking this alternative measure -- known as the U-6 for its department classification -- in 1995 after economists lobbied for a method comparable to the way Japan, Canada and Western Europe count their unemployed.
The truth is that even the broader measure of unemployment doesn't fully capture how difficult the job market is for U.S. workers. It doesn't include self-employed workers whose incomes have shriveled. It doesn't look at former full-time employees who have accepted short-term contracts, without benefits, and at a fraction of their former salaries. And it doesn't count the many would-be workers who are going back to school, taking on more debt, in hopes that advanced degrees will improve their chances of landing jobs.
That broader unemployment rate, or U-6, is up from 16.4% a year ago and from 9.7% in May 2008. It was 7.1% in May 2000.
"It has gone up a lot because a lot of people have been put on short hours," said economist Gary Burtless, a senior fellow at the Brookings Institution, a nonprofit public policy organization. "And there are a lot of discouraged workers."
"Some people have lost their income altogether, and others have seen a drop in hours even if they remain employed," Burtless said. "It was a double whammy for labor income."
The two trends are especially apparent in California, where the official unemployment rate is 12.6%. Severe layoffs in early 2009 wiped out 100,000 jobs a month, according to Michael S. Bernick, a research fellow at the Milken Institute and a former head of California's labor department. And the number of people working less than 35 hours a week has exploded. The recession has left 1.5 million Californians involuntarily working part time, though they are classified as employed.
Factor in these involuntarily underemployed workers plus the burgeoning number of discouraged job seekers, and California's real unemployment rate is 20%.
Another difference in this recession -- and a likely reason for the high number of discouraged job seekers -- is the number of people who have been unemployed for more than 27 weeks. The Wall Street Journal reports that 7 million Americans have been looking for work for 27 weeks or more, and the majority of them -- 4.7 million -- have been out of work for a year or more. (See "Chronic joblessness cuts deep.") In California, the number out of work more than 27 weeks is almost 900,000, more than the population of San Francisco.
Now, although severe layoffs are no longer occurring, hiring has not picked up significantly.
"The labor market is still very, very slow," Bernick said. "Each job (opening) brings tens, usually hundreds, of applicants."
Mary Engel is a freelance writer from Portland, Ore., who has written for the Los Angeles Times, Anchorage Daily News and Albuquerque Journal.
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