Real unemployment rate worse than 6%
Statisticians skip over frustrated job seekers
May 30, 2003
BY ADAM GELLER
ASSOCIATED PRESS
NEW YORK -- The nation's unemployment rate has edged up to 6 percent while Michigan's is 6.6 percent, but frustrated job seekers, shoulder-to-shoulder with so many others who recently lost work, are convinced the numbers miss something.
They're right, experts say.
The national unemployment figure, based on the government's monthly survey of 55,000 households, counts only those people who have made an effort to look for a job in the last four weeks.
It does not count the substantial number of Americans who have gone back to school because they can't find a job or those who have taken a part-time job for much less pay. It does not include people who, unable to find work, have set themselves up in their own businesses, many as home-based consultants.
And it does not count people who have become so demoralized that they've just given up looking.
If all those people were included, economists and the Labor Department's own figures say, the figure would be about 10 percent of the workforce.
"Right now the unemployment rate isn't telling the full story," said Jared Bernstein, an economist with the Economic Policy Institute, a Washington, D.C.-based research group.
Economists don't dispute the way the government collects data. They say the household survey is careful and accurate, but that it defines unemployment so narrowly it is easy to misinterpret.
For example, in April, the last month for which the government released data, 8.8 million people were counted as unemployed. That figure did not include 4.8 million people who work part time but want a full-time job, up about 600,000 from the previous year.
In addition, the survey found another 1.4 million people who want to work are available and have looked for a job in the last year. But because they haven't looked in the last four weeks, they weren't counted as unemployed.
That group includes about 437,000 people deemed discouraged -- those who have given up looking. That figure is up from 320,000 a year ago.
According to the government's formula, if people lose a job and just give up looking "then you just disappear altogether. You're not in the labor force anymore," said Sophia Koropeckyj, an economist with Economy.com, a research firm in West Chester, Pa.
The government does publish a broader alternative unemployment rate, albeit one that gets limited attention. In April, that figure, which is not seasonally adjusted, was 9.8 percent, down from a high of 11 percent in January.
That compares to a recent low of 6.3 percent in October of 2000, when the traditional unemployment rate stood at 3.9 percent.
The growth in the population of those who are available to work but not working or looking reflects the current economy but also points to long-term trends, economists say.
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