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Here Are the Three Biggest Things We Don't Know About the Labor Market

David Callahan
Two days ago, thirty-two people were arrested -- including 10 elected officials -- during a protest against low wages at LaGuardia Airport in New York City. As with so many airports, the agency that runs LaGuardia, the Port Authority, along with the airlines, contract out a lot of the jobs that make the place run. The downsides of being a contract worker are increasingly well known: lousy wages and scant benefits. 
 
But while domestic outsourcing has emerged as a scourge to the American Dream, here's the crazy thing: We actually don't know very much about the extent and nature of this phenomenon. And that blind spot can be added to several other gaping holes in our knowledge of the U.S. labor market. Here are three biggest holes, starting with outsourcing. 
 
How Many People Are Contract Workers
Once upon a time, most large organizations -- from companies to universities to airports -- fulfilled key functions with their own employees. Then executives and management consultants discovered that it was cheaper to hire outside vendors to do things like empty the trash cans or serve food in the cafeteria. A big reason it was cheaper is that you could play these vendors off against each other -- who can clean the offices for the least amount of money every month. And so began a race to the bottom of the domestic labor market nearly as deleterious to American workers as the more well-known race to the bottom of the global labor market. 
 
But just how deleterious is not precisely known. If any organization should know how many workers are employed in a contingent manner, or work for contractors, it is the National Employment Law Project, which closely tracks the netherworld reaches of the labor market. But as NELP noted in a 2012 report:
 
There is no precise measure of the number of workers in the United States today who are contracted out. . . although earlier government-commissioned studies have estimated that as much as 30 percent of the U.S. workforce was in some sort of “contingent,” or non-standard, employment relationship. 
2009 paper by several scholars, including two who worked at the Bureau of Labor Statistics, noted that "A variety of evidence points to significant growth in domestic contracting out over the last two decades, yet the phenomenon is not well documented." There are big gaps in knowledge and inconsistent data. 
 
This is a serious problem, because if we don't really understand what may be full third of today's labor market, how can we fix it?
 
How Many People Can't Find Work
Okay, this one will be more familiar to people, especially if they have read my blog posts about how the official unemployment rate is a total joke. What's really scary, though, is that even the BLS's more accurate U-6 unemployment rate may be wildly off. That rate counts "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons. . . " The U-6 rate was 13.1 last month, nearly 50 percent higher than the official rate of 6.7 percent. 
 
But as I wrote a few months ago,
even the U-6 unemployment rate is surely too low, because it doesn't count "long-term discouraged workers" -- people so disheartened by their prospects that they long ago stopped trying to find work. . . . Around 28 percent of working-age white men are not in the labor force, and yet only 6.1 percent are classified as unemployed by BLS. About 40 percent for black men are not in the labor force; just 14 percent are considered "unemployed." The government's assumption that so many millions of working age men are out of the labor force voluntarily just isn't credible. More likely, a good share of those men are "long-term discouraged workers," especially men who live in high unemployment areas where looking for work is fruitless or are older "obsolete" workers long ago laid off from dying industries. 
So to repeat: We don't actually know how many people in America want work but can't find it. That's a rather astonishing blindspot given the importance of jobs and the fact that we have two government agencies -- the Fed and the Department of Labor -- that have a mandate to address this issue and collect reams of data. Could it be that we actually don't want to know and publicize the real facts about unemployment?
 
How Many People Work Under the Table
All that official joblessness might not be such a big problem if millions of people were earning good money in the shadow economy -- working off the books for legal businesses or raking in cash with illegal ones. And surely many are prospering in this grey zone. But, again, exact details are maddeningly elusive. One study estimates that the shadow economy amounts to $2 trillion in the U.S., while another recent study estimated that it accounts for 8 percent of GDP, or over $1 trillion. 
 
Those are big numbers, but they tell us little about how much money individuals are making within this shadow economy or how it affects their standard of living. Think about that: between 8 to 16 percent of the biggest economy in the world is, empirically speaking, a black hole. 
 
There are a bunch of ideas floating around for how to fill these gaps in our knowledge, including proposals for better data collection around contract workers. Prioritizing such an expansion of knowledge strikes me as crucial. With millions of Americans just not making ends meet, we need to fully understand what we're up against.