STATISTICS CONCEAL THE FULL TRUTH
ON JOBLESSNESS

By Edward Gorham

President

Maine AFL-CIO

      On January 9 the U.S. government announced the most recent national unemployment figures. The unemployment rate dropped slightly to 5.7 percent but there was no encouragement in this tiny change since it occurred because 300,000 fewer people gave up looking for work.

      But, whether the published figure rises or falls slightly is relatively meaningless because the total only serves as a smoke screen hiding the true state of unemployment in Maine and the nation.

      Officially, the jobless rate dropped to 5.7 percent in December. By historical standards this does not appear high. But this conceals the true unemployment rate which is now in the range of 10% or more.

      Nationally, many economists agree that the official U.S. unemployment rate is highly misleading.

                One huge factor is the fact that anyone who works even a hour a week is counted as being “employed.”

      We start out with 8.7 million workers who are counted as “unemployed.” But there are an additional, uncounted 4.9 million workers who are counted as employed and who are working part time. These workers say they would rather be working full time but can’t find full time work. This is the highest number of dissatisfied part time workers in ten years.

      There are also more than 1.5 million workers who are out of work but are not counted as “unemployed” because they have stopped looking for work. Most of this group say they have stopped looking for work because they became depressed at the difficulty, if not impossibility of finding work. These uncounted unemployed are called “discouraged workers.” Their number has increased 20% in the last year and rose again in December.

      Put these three groups together and the unemployment rate in the United States jumps to 9.7% - a far cry from the close to 6% rate of unemployment likely to be the focus of the forecasts and arguments in the months ahead.

    The continuing political debate simply cannot erase the fact that more three million jobs have been lost since President Bush took office. Of these lost jobs 2.5 million where in manufacturing.
    Not even the most optimistic forecaster has been able to look into his crystal ball for 2004 and see anything except a net job loss for Bush’s first term. Bush will end his first term with a net job loss. This has not happened to any American president since Herbert Hoover who was defeated in 1932 and left office as the nation moved into the Great Depression.
      Not only are the hard numbers of unemployed discouraging but also the total time workers are out of work when they lose a job is also bad. The average length of unemployment has risen to 19 weeks – the highest level in 20 years.

      In virtually every area related to jobs and unemployment this nation is setting new records or ones that haven’t been seen for decades. But these are not new records of a sound economy they are the kind of records that haven’t been seen for decades – some of them unseen since the decade of depression in the 1930s.

      Late in the summer payroll employment began rising. However, the monthly job growth has been close to 100,000. This may seem like a lot of new jobs but it’s not. This is well short of the 225,000 jobs added each month during the Clinton years and it is also well below the 150,000 jobs a month that need to be added just to keep up with a growing working-age population.

      Also missing from the gross unemployment total is any evaluation at all of job quality. We know that Maine has suffered one of the highest job losses percentage wise in the nation – with manufacturing being especially hard hit. However, if a manufacturing worker with a good annual salary, pension and full benefits, including health care, loses a job and is forced to work by the hour at McDonalds or Wal-Mart he or she is still counted as “employed” although the economic loss to the family, community and state is immense.

    We have noticed as well that job losses are not confined to blue collar workers. White collar workers are suffering unemployment as well as companies either downsize, move abroad or simply hire the work to be done in India or China at a fraction of the salaries they were paying American workers.

      There has, and undoubtedly will continue to be, a lot of talk about jobs being a “lagging indicator” and that, as the economy picks up job growth will follow. However, there never has the lag between recovery and the creation of jobs been this long and this painful, economists say. The only other U.S. recession that was followed by such late and slow job growth came in 1991 and 1992, according to a study by the Federal Reserve Bank of New York. That “jobless recovery” helped doom the reelection of the first President Bush.