Unemployment -- It's Worse Than You Think

Listened to a blogcast from NPR's Planet Money (one of my all-time favorite shows, BTW) and learned a scary bit of info:

Unemployment is 8.1%. Unless, that is, you count all those "other people" -- in which case it's closer to 10%, or even 15%.

Want to know why? Make the jump ...

Many of us, if asked how to count the unemployed, would say something like "all those people who want a job and can't get one." Since it can be tough to measure the "want a job" part, the US uses a two-part test for whether or not to count someone as unemployed:

• Have you worked in the past four weeks?
• Are you looking for work?

Sounds good so far, right? The problem is all the people this leaves out. Here are some people who don't get counted in this method:

• Graduates looking for their first job
• Adults re-entering the workforce after being out for a while (having a baby, for instance)
• Persons who've given up on finding a job
• Persons in prison -- the US has the highest rate of incarceration among developed nations (1.5%), and obviously those persons are not working a normal job

If you leave out, for the moment, the persons in prison, you still have an additional 1-2%. So, a reasonable read on unemployment is about 10%.

But wait, there's more. You can also count the "marginally attached workers," as the Bureau of Labor Statistics calls them. These are part-time workers who would like to work full-time, but can't find a FT job. There's a bunch more of those as well.

How many more? Unlike the guess I gave you above, we know this one -- because the BLS tracks it. In fact, the BLS tracks six different unemployment rates, and you can get them all from the BLS web site. The "official" unemployment rate -- the one that gets reported -- is U3. The big one is the U6 rate, which for February 2009 stood at 14.8%. How bad is that? Last year it was 9.3%.

So, when you hear the latest on unemployment, remember that it's not counting everyone.

(For more info on the various ways to track unemployment, you can check out this Wikipedia article -- jump to the section on "measurement.")