Unemployment Rate: The Big Lie Behind The Statistics

 Unemployment Rate: The Big Lie Behind The Statistics

Unemployment Rate

According to the US Bureau of Labor, all of these workers are considered “employed.” They are viewed as part of the American economy’s success story, a big part of which is our 5% unemployment rate. As President Barack Obama boasted in February: “The United States of America right now has the strongest, most durable economy in the world.”

Most of these workers make far below $15 per hour. Some make as low as $7.25 per hour, the current federal minimum wage. Most lack benefits. Some, like adjunct professors, have a contingent, temporary jobs, sometimes consisting of only one poorly paid course per year. Many low-wage employees work two or even three jobs in an attempt to cobble together enough income to cover basic needs.

There are three main reasons the vaunted economic recovery still feels false to so many. The first is the labour participation rate, which plunged at the start of the Great Recession and discounts the millions of Americans who have been out of work for six months or more. The second is “the 1099 economy,” a term The New Republic’s David Dayen coined to refer to the soaring number of temps, contractors, freelancers, and other often involuntarily self-employed workers. The third is a surge in low-wage service jobs, coupled with a corresponding decrease in middle-class jobs. Full Story

Unemployment Rate Lies

The official unemployment rate in the UK right now is 4.5% – a record low. But, as the ONS makes clear, that number doesn’t count part-time workers who want full-time jobs, “inactive” workers alienated from the workforce, people who retire, students, or those who work in the home. Once you wrap all those people in, the number of jobless people is actually 21.5% of the workforce, according to the ONS. (US unemployment numbers are calculated in a similar way.)

People who have studied economics are very comfortable with the idea that official “unemployment” might be 4.5% even though the real rate of joblessness is four times that, 21.5%.

But ordinary folk in the real world are not that familiar with this distinction.

“The statistical definition of ‘unemployment’ relies on a fiction that economists tell themselves about the nature of work,” I wrote, because “economists have agreed on an artificial definition of what unemployment means.”

slack labour unemployment

His data filters out the inactive people who don’t want work, and he still gets to 14%. More interestingly, there has been a big switch in who is an inactive worker. It used to be that women were inactive – because they were wives and mothers who stayed at home. But in recent years they have moved into the workforce in ever greater numbers. The inactive rate for women has dropped from about 45% to 26.4%.

Men, by contrast, are dropping out of work (or being forced out) into ever-greater levels of inactivity. As this chart from ONS shows and the rate for men has tripled from somewhere near 5% to 16.4%: Full Story


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