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Fri October 18, 2013
Unemployment Rate Does Not Include The 'Missing Workers'
Originally published on Mon October 14, 2013 4:08 pm
More than four years have passed since the Great Recession and still the unemployment rate remains at 7.3 percent.
But in today’s labor market, the unemployment rate drastically understates the scarce availability of jobs.
The unemployment rate does not count “missing workers” — these are potential workers who have either given up looking for work or aren’t working. Rather, it is a measure of those who are still actively seeking employment.
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.
And at last check, the unemployment rate in this country was 7.3 percent. That was in August. The September numbers weren't released because of the government shutdown. But many economists say the official unemployment rate does not show the whole picture. It should actually be much higher. That's because there are a lot of unemployed people who don't show up in the numbers because they've stopped looking for work.
Well, a new report from the Economic Policy Institute tries to fill in the gaps. Heidi Moore is U.S. finance and economics editor for The Guardian, and she joins us now to tell us all about that. Heidi, welcome back.
HEIDI MOORE: It's good to be here. Thanks, Jeremy.
HOBSON: So, the EPI, which we should say is a left-leaning think tank, is hauling these workers, missing workers.
MOORE: Yes, absolutely. They're people who - they're either not working or they've just given up looking for work. And in the official government numbers, those people completely fall off the charts because, largely, we can only measure what companies tell us and who's filing for unemployment claims. And when you run out of unemployment or if a company is not keeping track of you anymore, you're essentially a missing person as far as the unemployment numbers go. And that misleads us about how bad the problem really is. And so the Economic Policy Institute decided to try to measure or at least estimate how many people had fallen through the cracks.
HOBSON: So what does the reports say? What would the unemployment rate be if we were counting all of these missing workers?
MOORE: Well, it would be incredibly high. It would be 10 percent. Right now, as you said, it's around 7.3 percent. And the Federal Reserve expects it to go even lower. I mean, they really do think that the unemployment rate is going to steadily fall. And they're right because the unemployment rate falls when people fall off of payrolls, when they're no longer participating in the economy, in working at all. And if you're an economics reporter or if you're a policy wonk, you know that. But to everyone else, it just looks like we're doing better as the unemployment rate is falling. And that is not the case.
HOBSON: But these people are deciding that they don't want to participate in the labor force. So should they - I guess, it might not be their choice completely, but they are making the choice not to look for work because of the circumstances. Is - so why does the EPI make the case that they should be counted?
MOORE: Well, they should be counted because it gives us a fuller idea of what's going on in the economy. I mean, if, you know, if we knew how we could, for instance, improve job opportunities, right, we could form policy that way. If we could include more people, you would see maybe different pressures on Washington. As long as things look good, Washington lawmakers can say, we don't have to do so much about unemployment. But if you show that unemployment is really bad, that ups the pressure a little bit.
HOBSON: How does the EPI figure out what the numbers are? Is it straight forward to estimate this?
MOORE: It's not straightforward at all. And the, you know, there are kinds of some ups and downs. There are things that they don't count, you know. For instance, some people who are retiring, they would have left the workforce anyway, and the missing workers number doesn't take account of that. It doesn't take account of who might have left the workforce at any rate because of school or retirement or things like that. But, you know, even despite that, it's handy to have an alternative measure that you can refer to.
HOBSON: And, Heidi, as we said, we didn't get the unemployment numbers for September because of the shutdown. How much of a problem is that for people like you who are trying to analyze what's going on in the economy, for economists and for policymakers?
MOORE: You know, it's a pretty big problem. People are taking it with a, you know, a grain of salt. We know there's nothing you can do about the government shutdown. But there was a really interesting press report today that said that economists are hording employment statistics and other kinds of government statistics while they can.
HOBSON: Heidi Moore is U.S. finance and economics editor for The Guardian. Heidi, thanks as always.
MOORE: Thank you.
HOBSON: And we'll be back in a minute. HERE AND NOW. Transcript provided by NPR, Copyright NPR.