The real unemployment rate ismore than 8%.
An unemployment rate at 5% used to be called full employment. Today it’s considered the sign of a recession.
When the Labor Department gives its March employment report this Friday, it’s important to keep in mind that the relatively low unemployment rate isn’t telling the whole story about the weakness of the U.S. labor market.
Economists surveyed by Briefing.com are forecasting a loss of 50,000 jobs from the nation’s payrolls in the month. That would mark the third straight month of job declines.
The unemployment rate is expected to jump to 5.0% from 4.8% in February.
But some economists point to other readings, which show that the market is much weaker than the unemployment rate would suggest.
For one, there has been an increasing number of people who want to work full time who are only able to find part-time jobs.
There is also a rise in the number of those who have stopped looking for jobs because they’ve become discouraged by the weak market. Finally, there has been a decline in the number of employees working as independent contractors.
According to the February jobs report, there were 565,000 more part-time workers who wanted full-time jobs than a year ago. That’s a 21.1% jump in the number of those who are under-employed.
In addition, a rapidly increasing number of people are being forced to take more than one job. There were 161,000 more workers in February who held more than one part-time job than there were in January. One economist said this is a further indication of how bad the market is.
“Basically, this is a sign that we’re in a recession,” said David Wyss, chief economist for Standard & Poor’s.
Wyss said another sign of the weakened market is the steady decrease in the past year in the number of temporary employees in the business and professional services sectors. There has been a loss of more than 100,000 jobs in this category in the past 12 months.
“This is a leading indicator, since these are very often the first employees cut,” said Wyss.
[T]he unemployment rate calculates only the percentage of workers who describe themselves as unemployed, divided by the number of those potential workers counted in the labor force. So under-employed people don’t show up as unemployed.
Also not showing up as unemployed are those who want a job but are no longer counted as being in the labor force for a variety of reasons. The number of people fitting this category rose by more than a half-million between November and February.
And if you look at the number of people out of work in addition to part-time workers who want full-time jobs as well as people not searching for a job at the moment, a far more alarming picture emerges.
Keith Hall, the commissioner of the Bureau of Labor Statistics, which prepares the monthly jobs reports, said in Congressional testimony last month that this broader measure stood at 8.9% in February, up from 8.1% a year ago.
“We’ve clearly had a broad weakening in the labor market,” Hall said.