Unemployment Data: An Ever-Changing Standard of Measurement

The current unemployment rate may be as high as 30% for non-farm workers in the US.  The official numbers from the Bureau of Labor Statistics (BLS) state that nationally, it’s closer to 10%.  But if you take a look at the way the government measures unemployment, and how that scale has changed over the past half century, you will begin to see that the numbers coming out of the Government’s Bureau and the actual numbers are quite different.

Since the beginning of this recession there has been a steady increase in the unemployment rate.  The highest of all the US states for unemployment is Michigan, which comes in officially at 15.2%.  The next highest is Nevada, at 13.2%.  These numbers, as disturbing as they may be, are likely inaccurate measurements of the real unemployment rates.  The states with the lowest unemployment rates are those with smaller populations and large agricultural economies.  States like Nebraska, Iowa, and Kansas, all have unemployment rates below 7.5%.  The state with the lowest unemployment rate is North Dakota, at 4.3%.Bureau of Labor Statistics

In 1994, The BLS stopped counting people who were no longer looking for a job, better known as “discouraged workers” in their unemployment statistics.  This was one of the last major shifts to unemployment measurement and this change helped to reduce the official number of unemployed by a few percent overnight.  Back in 1994, the unemployment rate was nowhere near what it is today.  If you trace the data back to the 1994 change in policy, you will see a sharp drop in unemployment in 1994, which coincides with the change in the way unemployment is measured in America.

Another way that unemployment data can be made to look rosier is by the simple fact that the BLS does not count underemployed workers as unemployed.  Underemployed workers are those people who are not full timers but would like to be.  Basically any person that earns a paycheck during a particular month is counted as employed.  Whether or not they work one day a month or seven days a week, they are still not lumped into the unemployed category.  Right now, independent estimates show that between 10% and 20% of the American workforce is underemployed.

Over time the BLS had made both major and minor changes in the way it measures labor statistics relative to unemployment.  If an accurate survey was made that included both people who were unemployed looking and no longer looking for work, as well as those who are underemployed, the true unemployment rate would be closer to 30% or higher.  This is a shocking number, considering that during the great depression, the unemployment rate for farm workers was 25% and for non-farm workers it was around 37%.  America has not seen unemployment rates this bad since the 1930’s, and many are left having to work two or three part time jobs to make ends meet.  Unfortunately, those with multiple jobs do not get counted as part of the “underemployed”, and therefore, are swept under the rug like so many other groups of people looking for steady work.