Truer unemployment rate rises to 17.1%
The headlines this morning: The official U.S. unemployment rate rose from 9.7 percent in March to 9.9 percent in April, even as the economy added 290,000 jobs. This happened because a number of unemployed Americans who had stopped looking for work decided to try to re-enter the job force last month. They are called "discouraged" workers. They were not counted as unemployed because, according to the Labor Department, you're unemployed only if a) you're out of work and b) you've looked for work in the previous four weeks. A whole bunch of people who had stopped looking for work started again last month, increasing the size of the labor pool. Not all of them found work, so the unemployment rate ticked up.
That's good news, but that said, a truer measure of U.S. unemployment also increased last month. If you also include all of the people who are still discouraged and all of those who want to work full time but can find only part-time work, that unemployment rate in April was 17.1 percent, a rate that has increased since the beginning of the year and is approaching its all-time high of 17.4 percent, hit in October.
What's going on? If discouraged workers are re-entering the labor force, why is the higher unemployment rate still climbing?
The answer seems to be found among those who are forced to work part time but who want to work full time. That number has increased since the beginning of the year.
In January, Labor reported that 8.3 million Americans were working part time for economic reasons, meaning they could not find full-time work. That number increased to 8.8 million in February, 9.1 million in March and 9.2 million in April.
The number of discouraged non-employed Americans in April was 1.2 percent, up from 1.1 million in January.
According to Tom Nardone, the BLS's assistant commissioner for employment analysis, one of the reasons the higher unemployment number went up was because the lower number went up, simple as that sounds. What he means: In addition to the part-time workers and the discouraged non-workers, the higher number also includes the official number, which went from 9.7 to 9.9 percent.
But there are also other factors that are often hard to quantify in such a large sample, Nardone said. For instance, depending on how the BLS survey questions were answered, an unemployed discouraged worker in April may not have been classified as such in March.
So fair enough. Regardless of the reasons, an official unemployment rate of 9.9 percent -- and a truer rate of 17.1 percent, both on the rise -- are politically unacceptable, ensuring that jobs will be a key issue in November's midterm elections.
By the way, click here to read an interview I did with BLS Commissioner Keith Hall (pictured) on how his agency counts the unemployed.
Follow me on Twitter at @theticker.
May 7, 2010; 5:30 PM ET
Categories: Data , The Ticker , Unemployment | Tags: Discouraged worker, Economy, Employment, Labor force, Unemployment, United States, bureau labor statistics, joblessness, official unemployment rate, part-time workers, unemployment rate
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