Sort by

Why the Biggest Problem in America is Both Underreported and Ignored

David Callahan

Washington is in its usual state of hysteria this week -- now over the Obamacare rollout -- so, as usual, few people in power are talking about the biggest problem facing the country: a still-stagnant labor market that has stranded millions in a jobless hell, with real unemployment rates for some groups at Great Depression levels. 

Consider the latest job numbers from BLS, delivered late because of the government shutdown. Unemployment rates for African-Americans stand at a murderous 12.9 percent, fully twice that for whites. 

Of course, though, these numbers are way low, given the narrow way that the government counts the unemployed. BLS's data on "Alternative measures of labor utilization presents" offer a more accurate picture, with the so-called U-6 table reporting the "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons. . . "

The U-6 unemployment rate for the nation as a whole was 13.6 percent last month. That's higher than the U.S. unemployment rate during the second half of the 1930s, as the Great Depression ground on and on.

But 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. This class of workers, notes economist John Williams, were "defined out of official existence in 1994" when the government revised how it counted the unemployed. 

But this group is potentially vast, as we can see just by looking at the labor force participation rate. 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. 

John Williams argues that if you add a reasonable estimate of these discouraged workers to the U-6 rate, the real employment rate is actually more like 23 percent -- which is close to the all-time high of the Great Depression. (Although who knows how well the government was counting jobless stats back then, either.) 

So why isn't anyone talking about all this? A few reasons. First, as Demos showed in our report Stacked Deck, elected leaders tends to disproportionately echo the concerns of the campaign donor class. And, as we document in that report, this group has been far more interested in reducing the deficit than tackling unemployment -- the exact opposite of the priorities of most Americans. 

But the second, perhaps bigger reason, that the huge unemployment problem is ignored and misreported is that this issue doesn't urgently affect the broader political and media elite that shapes America's national conversation. The unemployment rate for Americans with a bachelor's degree or higher is 3.7 percent, which is close to full employment, even when accounting for the fact that this number, too, is falsely low. (A jobless college grad who's been living at home since 2009 probably wouldn't be counted as unemployed.)

In other words, there is no unemployment problem for the educated Americans who run this country. So, not surprisingly, they are not talking about the problem. 

It's hard to know what's more disturbing: the seemingly permanent job woes of so many Americans -- or the fact that many of their fellow citizens just don't care.