Chesterton Tribune

Behind the numbers: Unemployment, by definition, undercounts the jobless in US

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The official national unemployment rate in September was 9.8 percent, according to the U.S. Bureau of Labor Statistics (BLS).

But if so-called “discouraged workers” are included in that tally, the rate was actually 10.2 percent.

If “discouraged workers” plus “all other marginally attached workers” are included, the rate was 11.1 percent.

And if all “marginally attached workers” plus “total employed part-time for economic reasons” are included, the rate was fully 17 percent.

In short, the official unemployment rate—as BLS itself acknowledges—undercounts the unemployed because of the very specific definition of the unemployed.

That definition: “Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.”

But BLS also defines several other types of worker for its “alternative measures of labor underutilization”:

Marginally attached workers are those “who indicate that they want a job, have looked for work in the last 12 months (or since they last worked if they worked within the last 12 months), and are available for work.”

Discouraged workers are a subset of “marginally attached workers” and are currently not looking for work for one of four reasons: “They believe no job is available to them in their line of work or area”; “They have previously been unable to find work”; “They lack the necessary schooling, training, skills, or experience”; “Employers think they are too young or too old, or they face some other type of discrimination.”

Persons employed part-time for economic reasons are those “who want and are available for full-time work but have had to settle for a part-time schedule.”

Brass tacks: when those three classifications of worker are included in the “alternative measure of labor underutilization,” the unemployment rate nearly doubles.

Only the employed and the officially unemployed are included in the labor force, BLS notes.

“Labor force measures are based on the civilian non-institutional population 16 years old and older. Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces. . . . (T)he labor force is made up of the employed and unemployed. The remainder—those who have no job and are not looking for one—are counted as ‘not in the labor force.’ Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.”

BLS bases its monthly unemployment reports on a statistical sampling by 2,200 Census Bureau employees of approximately 60,000 geographically representative U.S. households or 110,000 individuals.

Members of the households are interviewed and then the total estimated unemployment rate is extrapolated from the interview data.

“A sample is not a total count and the survey may not produce the same results that would be obtained from interviewing the entire population,” BLS says.

Still, there is a 90 percent chance that the monthly estimate of unemployment from the sample is “within 290,000 of the figure obtainable from a total census.”

Posted 10/23/2009