Sunday, June 15, 2003
"Real" unemployment
Nothing gets people's attention like the unemployment rate. It is the most widely watched and understood of any of the monthly economic statistics reported by state and federal sources.
But like most statistics, it has its flaws. One in particular gnaws at a sizable portion of the work force. It's the way the number of unemployed people are counted, especially the fact that a person is counted as unemployed only if they are actively seeking work.
People don't like that. Check out this e-mail I got after a recent column on the economy. It said in part: "Ever since I exhausted my unemployment benefits last September, I have not been included in the unemployment rate numbers. Yet, I spend all waking moments actively trying to find employment. If anything, my efforts have become more intense, not less since the checks stopped coming."
Kirsta Glenn, chief economist of the state Employment Security Department, said the state does not estimate the number of discouraged workers, defined as people who have left the work force because they do not expect to find a job. The state is too small a sample to get an accurate reading.
But that skirts the question. A lot of people want to know what the "real" unemployment rate is in Washington state. The statisticians at Employment Security will probably dislike this analysis but it is one way to get at the number for Washington state.
The total labor force in the United States is about 146.4 million people, according to the Bureau of Labor Statistics. The total labor force in Washington state is about 3.1 million people, or 2.1 percent of the national total.
The average number of discouraged workers in the country in the first five months of the year was 4.8 million, according to BLS figures. If the state has 2.1 percent of all workers, it probably has 2.1 percent of discouraged workers. But the state also is one of the hardest hit during this recession, with one of the highest unemployment rates in the country.
So, let's assume that the state has a higher percentage of discouraged workers, about 3.1 percent, a percentage point above the average.
The number of discouraged workers in the state then is about 148,800. Add that to the average number of unemployed in the state in the first four months of the year (217,900) and you have 366,700 unemployed workers.
The "real" unemployment rate in the state? 11.8 percent, well above the 7.3 percent reported for April. The jobless numbers for May will be released on Tuesday.
In the Seattle-Bellevue-Everett area, the picture is worse, as you might expect, given the fact that the Puget Sound area has borne the brunt of the regional recession. Using the same method, the unemployment rate for the Seattle area rises to 13.5 percent, up from the 6.6 percent rate reported for the first four months of the year.
"We've passed through nearly half the year with the bad news continuing to pile on for workers," said Jason Dring of the National Employment Law Project, a worker advocacy group based in New York. "The overall unemployment rate and initial jobless claims are worse than they've been at any point in the recession, and now it's taking people even longer to find work."
Is my analysis fair? Without hard numbers from the state, it is difficult to see where any other numbers might come from. And the higher rates for both the state and the Seattle area do reflect more the experience of many people here.
Even the BLS estimates that national unemployment rises to 9.7 percent from the "official" rate of 6.1 percent in May if discouraged workers are counted.
Another hint is the unemployment rate among subgroups. The unemployment rate for teenagers was 18.5 percent in May. For African Americans it was 10.8 percent. Hispanic rates were 8.2 percent.
The economy has lost more than a half-million jobs already this year, and well over 2 million since payrolls peaked two years ago. Almost 9 million people are officially counted as unemployed. As the figures above show, that's artificially low because it does not count those who have become discouraged and stopped looking for work.
For many workers, the jobless recovery is very real. For many workers, there is no recovery at all.
http://seattletimes.nwsource.com/html/businesstechnology/134997742_dunphy15.html