Just when you wanted to feel good about today’s jobs numbers, Aparna Mathur at the American Enterprise Institute drops some corrective figures on us (below). She calls the gap between the official unemployment number and the alternative measure “unprecedented disparity.” That disparity is bad because it shows that our “recovery” is happening amidst a selective part of the workforce.
I have to wonder: Since a good number of unemployed and underemployed people will not return to the workforce (when they return) at wages equal to what they would have been earning had there not been a recession, won’t inequality only spike more in the next half decade or so?
Here’s Aparna’s breakdown, issued in an email from AEI today:
- The official US unemployment rate hovers around 8.6 percent (8.5 % as of today), but a better measure of the real jobless rate is called the “U-6” which stands at 15.6 percent (15.2 percent as of today). The U-6 rate includes those that would still like a job and have looked for work in the last twelve months, not just the last four weeks. That means the number of Americans hurt by the bad economy is almost twice what the official number would suggest.
- In fact, the official rate excludes workers who have decided to drop out of the labor market altogether — either because they are discouraged or for other reasons — and also ignores workers who settle for part-time work because they are unable to find a full-time job.
- Currently more than 5.6 million Americans, or an astounding 43 percent of all unemployed have been unemployed for more than 27 weeks. The tremendous increase in long-term unemployment is one factor driving the unprecedented disparity between the official measure of unemployment and the alternative measure (U-6). Long-term unemployment has a damaging psychological impact on workers’ willingness to keep searching for work and motivates them to accept part-time work.
- As bad policy from Washington forces businesses to seek flexibility, the chasm between the U-6 and official unemployment rates may become a permanent fixture of the economic landscape.