Update: August 2020, “Unemployment” and “Not Working” Rates

Written by Leonard   
Friday, 04 September 2020 05:05

The Bureau of Labor (BLS) statistics states the US labor force is 160 million with 6.3 million workers leaving the work force since February 2020.  A large number of Americans who left the workforce are not considered unemployed, but they are not working.  This number is estimated to be about 33% of eligible workers [1].  Even if we ignore 16-18 year-olds, this number of just “not working”  US adults is more than ten million. They may not be looking for employment for a variety of reasons, including the lack of jobs,  but are not included in the unemployment rate.

Perhaps a better estimate of the seriousness of the current unemployment problem is given by former Bureau of Labor Statistics Commissioner Erica Groshen [2]. She has her own formula for counting total unemployment, right now.  She states:

“What I’ve been doing is adding up all the people whose jobs have been disrupted — the bulk of them are probably pandemic- or recession-related,” she said.  Including those waiting to be called back from furlough, and part-timers who want full-time work — she comes up with approximately 25 million.  Back in February, before the pandemic hit, 158 million Americans had jobs. So about one in six of them don’t, now.  That’s a current “unemployment rate” of 16%.

Workers have now filed more than 52 million initial jobless claims since layoffs spiked in mid-March, suggesting about a third of the American labor force has been sidelined at some point during the pandemic, according to the US Department of Labor  [3].  If we add  even a “lowball” 15 million “not working,” to the number who  filed for unemployment to Groshen’s number, we have a “not working rate” of more than 25%.  At least 1 out of 4 eligible workers have no job.

It’s hard to believe that Trump’s BLS continues to report single digit “unemployment” because it simply does not reflect the number of people looking for non-existent jobs nor an accurate sense of this aspect of the economy.  But then this allows Trump to jump on the reported low “unemployment rate” as the state of his economy...it’s just that this  BLS estimate seems to have little to do with the number of people wanting a viable job “right now,” that isn’t there, making Trump’s claims of a great economy meaningless.

[1]  https://www.bls.gov/opub/mlr/2016/article/labor-force-participation-what-has-happened-since-the-peak.htm

[2] https://www.marketplace.org/2020/08/06/how-many-americans-unemployed-right-now/

[3] https://nypost.com/2020/07/23/us-jobless-claims-climb-to-1-4-crisis-total-tops-52m/

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