In recent months, there has been a great deal of news coverage that contrasts the nation’s low unemployment figures with the “hidden unemployed” population — individuals who are working part-time but would really like to be employed full time.
In June, the New York Times published a story that highlighted low unemployment, but warned the “economy’s weak spots remain.” Huffington Post headlined “The Unemployment Rate — what the numbers do and don’t tell us.” This is just a couple of examples; many more exist.
The issue involves the Bureau of Labor Statistics’ well-reported unemployment rate that only tracks people who don’t have a job and have actively looked for work in the last four weeks, and are currently available for work. The argument goes, as the nation’s unemployment rate drops as it has from January’s 4.8 percent to August’s 4.4 percent, is it a result of people finding jobs and therefore advancing out of unemployment or is it because many Americans just stopped looking for work?
Complicating the matter is that workers are classified as employed if they performed any work at all for pay, whether part-time or full-time, during the week when the government conducts its Current Population Survey. Even further clouding the picture is that the labor force participation rate has cratered to its lowest rates since the late 1970s, according to a March 2017 Pew Research study.
Interestingly, the total number of Americans who were not counted in the U.S. BLS labor numbers rose to 94.7 million in June, up more than 660,000 people from the previous month. Some of them are retired or going to school. However, many of them have simply stopped looking for a job.
Fact is, many economists and industry analysts believe the lowered unemployment rate is the result of hundreds of thousands of Americans exiting the labor force rather than finding employment.
There may be another explanation that is less about dropping out of the labor force…