The really, really bad news about the unemployment rate.

Slate by Daniel Gross | Oct. 23, 2008 (News Analysis)

... maybe the employment data are much worse than they seem. In the past year, the two key measures of employment—the unemployment rate and the payroll jobs figure—have been poor but not awful. The unemployment rate has risen from 4.5 percent a year ago to 6.1 percent. And in the first nine months, 760,000 payroll jobs were lost. This is unwelcome but not catastrophic. So why do things feel so bad? It's not because, as Phil Gramm suggested, we're a ... Full Story »

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by Marsha Iverson - Oct. 23, 2008

Daniel Gross has hit on one of the biggest and least-acknowledged issues of the American economy. Underemployment has long been a problem that has stayed 'below the radar' because the standard data don't capture the information. In this story, Gross cites the numbers, to the best of our national tracking ability. And he ends with a profoundly accurate--if unnerving--conjecture. This may be one of the biggest problems in the US economy.

There's no measure for the appropriateness of employment: How many attorneys who can't get hired by law firms are slinging hamburgers for minimum wage in part-time jobs? How many graduate degree-holders are desperate for anything, but don't even get interviews because they're "overqualified"--a euphemism for "you'd cost too much" or "you might be a threat to the supervisor"? How many older workers with impeccable skills and experience are rejected by entry-level screeners in the HR department because their degrees were granted too long ago? When Senator McCain referred to the "fundamentals of the economy are strong," and spoke rhapsodically about the skills, drive, dedication and ingenuity of the American worker, he was right. We ARE, for the most part, all of those good things. What many of us also are is chronically underemployed, despite everything we do to bridge the gaps. Would that there were a way to measure the loss of productivity when highly skilled workers consider themselves lucky to find jobs of any kind, with low pay and no benefits.

And the alternative labor underutilization measures show a lot of stress. The data on people not in the work force show the number of people not looking for work because they’re discouraged about finding jobs has risen from 276,000 in September 2007 to 467,000 in September 2008—up 70 percent. The percentage of people unemployed for more than 15 weeks stood at 2.3 percent in September 2008, up from 1.6 percent in September 2007, a rise of nearly 45 percent. But the most troublesome is the U6. The U6 is sort of the summa of job angst, a shorthand tally for the aggregate of job-related frustration. (Moneybox covered some of this terrain back in 2004.) To compile the U6, the BLS takes the number of unemployed, plus all marginally attached workers, plus all of those employed part-time for economic reasons, and then calculates that total as a percentage of the sum of the entire civilian labor force plus marginally attached workers. The U6 in September rose to 11 percent, its highest level since the data series started in 1994 and significantly higher than it was in the last recession, in 2001. … Three years ago, when the unemployment rate was 5.1 percent, an additional 3.9 percent of the labor force fell into one of those other underutilized categories. Last month, with the unemployment rate at 6.1 percent, an additional 4.9 percent of the labor force was underutilized. (See charts comparing the unemployment rate and the U6 rate.) Add it up, and more than 10 percent of American workers are essentially not contributing full-time to their families’ well-being and to that of the economy at large. The unemployment rate may still be historically low, but the underutilization is historically high.

Why don’t they find a way to measure the “highly skilled people with very low-skill jobs”? Or the people whose unemployment benefits have been exhausted, but still have no job? Among my close friends I can count a double-digit number of highly-skilled, highly-credentialed, highly experienced but underemployed. Most have Masters’ Degrees, and perpetually try to secure better positions, and always are passed by without any consideration at all. There is a fundamental flaw in the way American business, public, private, and nonprofit sector employers select, supervise, reward, and compensate their employees. Unions have been the traditional advocates for workers, but union suppression maneuvers have taken a serious toll on unions since Ronald Reagan broke the Air Traffic Controllers’ union in the 1980s. The disenfranchisement of workers not only impairs their ability to earn living wages, but also hinders professional growth and development, quality of life, and the future prospects for their families. Many factors contribute to this mess: offshoring jobs to cheap labor; cheap imports back, sold in gigantic mega-stores, putting smaller competitors out of business; no new industries starting in this country. We don’t make things any more—we import cheap goods. The things we do make, we simply assemble from parts made offshore. No matter what the business sector, one factor remains universally oppressive: the health care system—or lack of one. As long as employers bear the brunt of providing health care, their cost of labor cannot compete with the foreign labor market. We’ve reached—possibly exceeded—the capacity of our current approach to reality, and need to rethink everything we do and find a better way.