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Misleading unemployment figures muddled job crisis Original Source Link: (May no longer be active)
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Misleading unemployment figures paint muddled picture of jobs crisis
By: Asheville Citizen-Times
Posted: Feb. 10, 2004 6:03 p.m.
The nation's unemployment rate continues to fall. In January it was 5.6 percent, as compared to 5.7 percent in December and 5.9 percent in November. In North Carolina, the December rate was 6.1 percent, down from 6.2 percent in November and 6.7 percent in July.
Good news? Not necessarily. The unemployment rate is a notoriously misleading statistic that badly understates the severity of the jobs crisis.
To begin with, the rate considers only those people who are looking for work and not those who have given up. To the Bureau of Labor Statistics, this latter group essentially does not exist. "People who are jobless, looking for jobs and available for work are unemployed," the bureau says. "People who are neither employed nor unemployed are not in the labor force."
To be considered unemployed, a person must have actively looked for work within the past four weeks.
Reading the want ads doesn't count. People "marginally attached" to the work force, which basically means they want to work and have looked for a job during the past year, are not considered unemployed.
The reason the unemployment rate fell between November and December was because 309,000 people stopped looking for jobs. "The decline in the unemployment rate is ... misleading," said Anthony Chan of Banc One Investment Advisors. "It's a sham because of how we got there - the labor force dropped precisely because more people became discouraged."
Lee Price of the Economic Policy Institute echoed those sentiments, "The unemployment rate is a misleading indication of this economy," he said. "We have an enormous missing labor force. What we have is across-the-board withdrawal from the labor force."
Another problem is that the rate doesn't consider the underemployed, those holding jobs that pay far less than the jobs for which they are qualified but do not exist. In January, for example, the economy created 116,000 new jobs overall, but almost all of that gain (105,000) was in the services sector. The number of professional business- services jobs fell by 22,000, and the number of industrial jobs by 11,000.
It is not unreasonable to assume that many of those 105,000 new services jobs are filled by people who lost jobs in higher-paying fields.
In North Carolina, manufacturing employment for December was down 4.4 percent from December 2002, while leisure and hospitality employment was up 2 percent.
Another category of underemployed are those the North Carolina Budget and Tax Center calls "involuntary part- timers ... workers who although they usually work full-time have settled for part-time work because they could not secure full-time employment. This group grew 18 percent between 2001 and 2002."
This category is probably related to the shift to a service economy. "One of the possible reasons for this increase (in involuntary part-timers) is (that) the rise in service industry jobs, which tend to be part-time, are absorbing many of the unemployed," the Budget and Tax Center notes. "Unfortunately, many of these jobs tend to be low- wage employment as well."
Not all of those in privation are without jobs. Scott Rogers, executive director of Asheville-Buncombe Community Christian Ministries, noted last fall that the increase in requests for food assistance came in part because, "Those who were underemployed had their hours cut back." Yet these people are considered employed by the Bureau of Labor Statistics.
And then are those the bureau calls "unpaid family workers." These include "any person who worked 15 hours or more a week without pay in a family-operated enterprise." These people also are counted as being employed, even though they are earning nothing directly. Granted, they may be contributing to the family income by doing work that otherwise who have to be performed by paid employees, but that is far from certain.
Finally, none of this considers the differences in job prospects among various groups of people. "Workers with less than a high-school education fared far worse than their counterparts with greater levels of formal education," the Budget and Tax Center says. "Similarly, African Americans and Hispanics are experiencing much greater difficulty securing employment as compared to their white peers."
In 2002, more than 14 percent of North Carolinians without high-school diplomas were unemployed. The rate was 10.8 percent among Hispanics and 10.7 percent among African Americans. All this was at a time when the overall rate was 6.7 percent.
This nation needs a measure of employment that accurately reflects the state of the work force. Those who have sufficient unearned income that they do not need to work, a category that includes most retirees, should not be considered unemployed. Neither should those who cannot work because of physical or mental impairment. Beyond that, however, those without jobs should be classed as unemployed.
We cannot develop reasonable national and state policies to alleviate unemployment if we do not even recognize how many people are unemployed.
© Asheville Citizen-Times, 14 O. Henry Ave., Asheville, NC 28801, Phone: 828-252-5611.
The Asheville Citizen-Times is a Gannett Newspaper.
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