Approaching a Depression? New Twist in the Old Saga of Under-Counting the Unemployed
I'm pretty sure that AlterNetters, savvy bunch that they are, are well aware of the fact that a lot of working Americans' economic pain isn't captured in the "official" unemployment rate.
While that number was 8.1 percent last month, the broadest measure the government tracks -- which includes those working part-time for lack of a full-time gig, those who have said, 'fuck it' and given up the search out of frustration and other "marginally attached workers" -- was 14.8 percent.
But, wait, says economist John Schmitt, there's more!
"February's unemployment rate of 8.1 percent is bad news, but the unemployment picture is even worse than it looks," said Schmitt (who, by the way, never answers my emails, but whose work I'm promoting here anyway because I'm just that kind of guy).
The gist of the study is this: comparing this recession -- or depression or whatever we're calling the econopocalypse these days -- to past downturns leads to an apples an oranges problem because of demographic changes that have taken place in the American workforce.
Here's the quick and dirty from the ole' press release:
The report, "Is the U.S. Unemployment Rate Today Already as High as It was in 1982?," adjusts the current unemployment rate to account for demographic and statistical differences that lower the unemployment rate today by 1.4 percentage points, relative to the official unemployment rate in 1982. After these adjustments, the current unemployment level rises to 9.5 percent, a level that is close to the 1982 average of 9.7 percent.
"After accounting for these demographic and statistical differences, today's unemployment rate rises to 9.5 percent, already on a par with the worst recession since the Great Depression," said Schmitt.
The report notes that the population today is substantially older than it was in the early 1980s, which has the effect of lowering the unemployment rate today relative to the past. Young people have a higher unemployment rate than older workers because the young change jobs more frequently and are more likely to move in and out of the labor force. In 1982, about 22 percent of the labor force was between the age of 16 and 24; in 2008, 16-to-24 year olds were only about 14 percent of the labor force. As a result, the age of the typical US worker has risen from 35 in 1982 to about 42 today. Adjusting for this aging of the population raises the unemployment rate in 2009 by 1.2 percentage points.
Of course, some argue that the real real unemployment rate is higher still ...