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Millions of Americans Remain Unrepresented in ‘Official’ Unemployment Numbers

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The U.S. Department of Labor’s numbers for December 2014 show a national unemployment rate of 5.6 percent, the lowest since June 2008. The results for January 2015 will release on Friday, and experts expect the rate to drop even further. The White House, Wall Street, and the media are celebrating what appears to be a near complete labor recovery from the financial crisis and recession of 2008.

But is the unemployment rate a good gauge of the health of the economy? Is it the right statistic to use to determine how many Americans are unemployed? An evaluation of research methods, as well as the external validity of findings, suggest otherwise.

The first step to understanding the unemployment rate is to understand how it is calculated. The Department of Labor has put together a Current Population Survey every month since 1940, contacting roughly 110,000 individuals in 60,000 households sampled from a variety of demographics and geographical locations — covering age, sex, race, marital status, education, and more.

If a subject works full-time, part-time, or is self-employed, they are considered employed. If a subject does not have a job, but has been seeking one for the past four weeks, they are considered unemployed. If they do not have a job and are not looking for one, they are considered to be outside the labor force.

The rate is then calculated by taking the number of people who are actively looking for work and dividing that figure by the number of people who have jobs plus those who are actively looking (i.e. the labor force). For example, a survey of 110,000 respondents could yield the following results:

  • 85,000 have jobs, either working for an employer or running their own business.
  • 5,000 are reported to be looking for work.
  • 20,000 are not included in the labor force, for a variety of reasons: they may be going back to school, may be disabled and unable to work, or have simply given up looking for work in a difficult economy.

By dividing 5,000 by 90,000, the unemployment rate would come out to about 5.6 percent, and the government would be celebrating a decisive victory in workforce development.

Does that sound like a good indicator of employment to you?

To start, while 110,000 people is a significant sample size, there is no way of telling whether or not it is truly reflective of the remaining hundreds of millions of people who live in the United States. To do so would cost too much money, take too much time to get correct information, and annoy citizens with monthly visits from the government asking personal questions.

This sampling comes with a degree of error, with the federal government being 90 percent confident that the monthly estimate is within 300,000 of the exact figure.

Next comes the content of the survey, particularly the questions asked. Oddly enough, the survey does not directly ask subjects if they are employed. Instead, it asks 11 questions about how the individual spent their previous day and week. While surveyors claim that the wording of the questions allows for more honest answers, it also results in the survey leaving many unemployed people uncounted.

For example:

  • If you are unemployed and have stopped looking for work over the past four weeks, you will not be counted as unemployed.
  • If you are out of work but mow someone’s lawn once a week for $20, you will not be counted as unemployed.
  • If you are a recent college graduate who takes on a 10 hour/week internship because that is all that is available, you will not be counted as unemployed.
  • If you are self-employed but your business is presently not generating income, you will not be counted as unemployed.
  • If you are employed but do not earn a livable income (a.k.a. ‘under-employed’), you will not be counted as unemployed.
  • If you are a seasonal worker, but have not secured employment afterward, you will not be counted as unemployed.

Put the two elements together and you have an unemployment rate that is far from an accurate measurement of national labor statistics.

Referring to the sample equation above, consider the possibility that, of the 20,000 individuals left out of the labor force, 10,000 fell into one of the categories that fall through the cracks. That would result in an actual unemployment rate of 15 percent, nearly triple the ‘official’ rate of 5.6 percent. The numbers are hardly encouraging when you look at them that way.

Of course, we must acknowledge the improvements our economy has made since the Great Recession. An ‘official’ unemployment rate of 5.6 percent is indicative of progress, and shows that America is pulling itself out of economic hardship. But before our nation’s leaders start patting themselves on the back, it is important for them to acknowledge the approximately 30 million Americans who are still out of work or severely underemployed and are not celebrating just yet.

Photo Credit: Luna Vandoorne / shutterstock.com

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740 comments
Avery Turkovich
Avery Turkovich

Good news for the American People would be more full time jobs with occasional wage increases and without getting benefits taken away – And we all know that that's not happening. Unfortunately, because of what our so-called leaders from both parties have allowed and enabled to happen to our country and the American people, there are continuously more and more Americans falling out of the middle class, through no fault of their own. For the last 25-years our government has allowed and enabled our country's industries to get sucked out to countries like Communist China, India, Mexico, etc and allowed illegal aliens and H-1B foreigners to come into our country and take away tax-paying American's jobs and drive down wages. We obviously need a change in this country – Because, since the free traitors have had their way of it, our largest export has been American jobs and money. Over the past several decades, all that our traitorous politicians from both parties have been doing is selling out the American People, by stalling, spending, removing protections and allowing illegal aliens to continue to pour in and American jobs and industries to pour out, and all while collecting their American tax-payer funded paychecks, benefits and whatever else they get on the side from their various lobbyist friends. The real problem is that both parties are just doing the bidding of their masters, while lamely trying to look like they're trying to represent us. Let’s face it, neither party really wants to fix the core issues like outsourcing, illegal “immigration” and the importation of foreign visa workers, because they want the cheap labor – For way too many years now, all that either party has been giving the American public is lame political posturing, tokenism and rhetoric – They treat the issues as political footballs and just point fingers at each other or even worse yet, just ignore the real core economic issues altogether – They've used peripheral social issues for years to polarize and distract the American people to the left and the right, while they sold us out to other countries like communist China, India and Mexico with the complicity of both sides of the media who are owned by a handful international corporations. Wake up America – We've become a consumer driven debt ridden society. Nowadays it's obviously not about Americans being either lazy or uneducated as many try to profess, but about wages, benefits, expenses and regulations in other countries that are not even remotely close to the wages, benefits, expenses and regulations in our country – It's not just happening with blue-collar jobs – It's happening to engineers, IT people, biotech workers, customer support, procurement, managers, etc......................... And the American citizens on the lower end of the skill spectrum need jobs too. It has all happened way too fast – Our government leaders should have put measures in place to make it slower, so that it wouldn't devastate our country, which has no chance when competing with other countries that don't play by the same rules or have pay scales that are even remotely close. It's Not Rocket Science – We need a much larger volume of income-tax-paying American citizens working again in order to generate enough revenue to fund The United States of America – It's not rocket science – If Americans aren't working – The America that we all know and love is not going to continue to exist – It's about the volume of dollars and jobs going out our country vs. the volume of dollars and jobs going out. Our huge trade deficit and indebtedness to foreign countries like communist China is obviously not in the best interest of our country or the American people. Something has to be done because our current system is not working - Successful economies like Germany, Japan, Sweden, Canada and China protect their domestic industries, citizens jobs and business and it's about time that we start doing so as well. Bringing manufacturing back home to the USA is going to end up being not only a key to restoring our economy, but to maintaining our national security as well. The American People need actual Loyal American Leaders who will start coming up with some sensible measures and putting them in place to stem the tide or this is going to continue to have a devastating effect on the United States of America and the American People. The only real fix for our great country to bring back businesses and jobs to income-tax-paying American citizens. That's where our government leaders have to step up and put some sensible measures and incentives in place to keep jobs here in the USA or the real economy and infrastructure of the country we love will be destroyed along with the future of the American people. The bottom line is that "Our Government" has to protect domestic industry and the jobs that those industries provide – If they do that, the rest will take care of itself. The American people will need good jobs with health-care benefits in order to be able to pay for the services of those educated doctors, lawyers, college professors, etc – It can't all be chiefs and no Indians – There is an equally important place for both of them in America. Our leaders are supposed to be elected by the citizens of the United States of America to represent the interests of those citizens and the country itself – They are not supposed to be representing Wall Street, lobbyist, international corporations, the global marketplace (WTO, NAFTA, TPP, KORUS), foreign citizens, foreign interests or illegal aliens – And it's time that all of our so called leaders start honoring that fact.


Lois Muir McClain
Lois Muir McClain

Not everyone can pick up and move to where the jobs are for a variety of reasons. Sure, it makes sense, but some people have been unable to sell their home, because real estate us sluggish in their area. Some people have aging or ailing parents they can't leave. It's not as easy as some make it sound.

David Tice
David Tice

HeyJerry Reuter no such info on the Forbes site. Nice try. Checking the other now.

David Tice
David Tice

So what was the REAL unemployment rate due to the Republican/Bush recession? What was it REALLY leading up to Bush's final DISATEROUS days in office. And how much BETTER IS IT NOW. Whatever it was the way Bush and his "administration" left it, it is better by half now. If Bush really crashed it to 20% unemployment it's at 10% now. If he crashed it to 30% it's at 15% now. Republicans think everynody else is stupid.

Randy Ripple
Randy Ripple

93 million dropped out, wow obozo is quite the leader!

Robert Peveto
Robert Peveto

Kinda like those characters on " Taxi " the sitcom . Only one was a career driving , the rest were hoping to be driving temporary :) I worked at a shipyard in the 70s and there sure were a lot of lawyers and such burning rods . I met a guy at a college that worked at the yard back then ...He was about to retire as a professor .

Robert Peveto
Robert Peveto

As always ,they need to go where the work is being done . My son and his wife had four jobs in Houston , moved to Philly in July and already have 3 jobs .... You must stick and move . An out of work computer programmer welding , if only temporary , for 25 bucks per hr isn't a bad thing.

Stephen Lee
Stephen Lee

Robert Peveto localized economic success doesn't make a nationally robust economy. For one, there are switching costs and start up costs that mean people can't take advantage of purely localized economic success. And of course it is impossible for all marginally employed and unemployed people to move to Galveston. The island can't fit them all and supply would start to exceed demand, ruining your full employment. Are the jobs permanent or temporary? There are still empty 1800s boom towns out west, I believe. And in coal mining regions too.

Joey Deacon
Joey Deacon

Dennis, I posted my source to back up my statements which are based on bureau of labor statistics yet it doesn't bear any reality? So now we are off in deflection land talking about wages, income inequality and cost of goods based off what you say with no source or references to verify? Usually the defense of choice for the shambles Obama has caused is blaming Bush, now it's all Regan's fault instead. Priceless - but if I take what you said at face value you are stating that Obama has done nothing positive for the economy just continued the downward slide caused by Reagan. These democrat arguments get more and more ridiculous and obtuse as they go along.

Stephen Lee
Stephen Lee

Robert Peveto you must know few people then. My wife for starters, the networking groups she attends, the software guy no longer riding the train because he lost his job, and many more.

Dennis Speek
Dennis Speek

Convenient number grab Joey. Not based on reality in the slightest. Corporations fueled by greed are the reason for short hours and meager wages, not Obama. Reagan's policies started the snowball that is our current economy. When he started it it was still small, as time went on the cumulative effects of his policies have grown to what we have now. 50,000 factories shut down in the US and moved to Asia. Wages for workers stagnated while CEOs and bankers are pulling in massive increases. (example, Japans worker/CEO rate is 50:1 and the US is 475:1.) Costs of goods have dropped for the Corporations but prices have gone up. Explain that one.

Martin Price
Martin Price

It really no longer matters what party came up with the method, both Democrats and Republicans either praise them or ignore them. The government also provides another statistic that Obama does not want to put out there, the average yearly income! The average yearly income has dropped EVERY year for the past 6 years!!!!!! Why? Well more part time workers and temps! The reason being that Obama lowered the number of hours a person could work and have to be offered benefits. What this lead to was part time people getting their hours cut and more part timers hired! Wow, people who could not afford to have their hours cut had their hours cut, and the unemployment went down because more part time people were hired! The people who no longer get unemployment even though they never found a job are no longer counted as part of the work force, as a result the numbers look way better then they really are. My son, a vet, just graduated with a 4 year degree can't even get an interview, let alone a job! Perhaps he can help Obama lower the unemployment by being a temp or taking a part time worker flipping burgers!! He is very depressed, all that crap about hiring vets he is finding out is a crock!

Dennis Harrell
Dennis Harrell

So, what's the solution? It's one thing to just automatically blame unemployment on President Obama, but the right never offers any practical suggestions. Liberals know what needs done. We need a jobs bill, an infrastructure bill, and an increase in the minimum wage. All the Republicans have to offer is more tax breaks for the rich.

Benny Hill
Benny Hill

So true.....for years these numbers been wrong and both sides have used this gerry rigged system...

Johnny Ritchie
Johnny Ritchie

A good question for determining if the commenters are a pessimist, optimist, realist,,,,or crazy. I am a realist, based on this article stating the calculations have been done the same every month since 1940. So, simple math is 5.2% (current) unemployment is significant improvement from 10% unemployment. Imagine where we would be if not for the obstruction to Jobs Bills and obstruction to limiting outsourcing Jobs Bills! Quit electing legislators solely representing Lobbyist, and elect legislators which represent the 100% of the USA.

Russ Bischoff
Russ Bischoff

Good news for the American People would be more full time jobs with occasional wage increases and without getting benefits taken away – And we all know that that's not happening. Unfortunately, because of what our so-called leaders from both parties have allowed and enabled to happen to our country and the American people, there are continuously more and more Americans falling out of the middle class, through no fault of their own. For the last 25-years our government has allowed and enabled our country's industries to get sucked out to countries like Communist China, India, Mexico, etc and allowed illegal aliens and H-1B foreigners to come into our country and take away tax-paying American's jobs and drive down wages. We obviously need a change in this country – Because, since the free traitors have had their way of it, our largest export has been American jobs and money. Over the past several decades, all that our traitorous politicians from both parties have been doing is selling out the American People, by stalling, spending, removing protections and allowing illegal aliens to continue to pour in and American jobs and industries to pour out, and all while collecting their American tax-payer funded paychecks, benefits and whatever else they get on the side from their various lobbyist friends. The real problem is that both parties are just doing the bidding of their masters, while lamely trying to look like they're trying to represent us. Let’s face it, neither party really wants to fix the core issues like outsourcing, illegal “immigration” and the importation of foreign visa workers, because they want the cheap labor – For way too many years now, all that either party has been giving the American public is lame political posturing, tokenism and rhetoric – They treat the issues as political footballs and just point fingers at each other or even worse yet, just ignore the real core economic issues altogether – They've used peripheral social issues for years to polarize and distract the American people to the left and the right, while they sold us out to other countries like communist China, India and Mexico with the complicity of both sides of the media who are owned by a handful international corporations. Wake up America – We've become a consumer driven debt ridden society. Nowadays it's obviously not about Americans being either lazy or uneducated as many try to profess, but about wages, benefits, expenses and regulations in other countries that are not even remotely close to the wages, benefits, expenses and regulations in our country – It's not just happening with blue-collar jobs – It's happening to engineers, IT people, biotech workers, customer support, procurement, managers, etc......................... And the American citizens on the lower end of the skill spectrum need jobs too. It has all happened way too fast – Our government leaders should have put measures in place to make it slower, so that it wouldn't devastate our country, which has no chance when competing with other countries that don't play by the same rules or have pay scales that are even remotely close. It's Not Rocket Science – We need a much larger volume of income-tax-paying American citizens working again in order to generate enough revenue to fund The United States of America – It's not rocket science – If Americans aren't working – The America that we all know and love is not going to continue to exist – It's about the volume of dollars and jobs going out our country vs. the volume of dollars and jobs going out. Our huge trade deficit and indebtedness to foreign countries like communist China is obviously not in the best interest of our country or the American people. Something has to be done because our current system is not working - Successful economies like Germany, Japan, Sweden, Canada and China protect their domestic industries, citizens jobs and business and it's about time that we start doing so as well. Bringing manufacturing back home to the USA is going to end up being not only a key to restoring our economy, but to maintaining our national security as well. The American People need actual Loyal American Leaders who will start coming up with some sensible measures and putting them in place to stem the tide or this is going to continue to have a devastating effect on the United States of America and the American People. The only real fix for our great country to bring back businesses and jobs to income-tax-paying American citizens. That's where our government leaders have to step up and put some sensible measures and incentives in place to keep jobs here in the USA or the real economy and infrastructure of the country we love will be destroyed along with the future of the American people. The bottom line is that "Our Government" has to protect domestic industry and the jobs that those industries provide – If they do that, the rest will take care of itself. The American people will need good jobs with health-care benefits in order to be able to pay for the services of those educated doctors, lawyers, college professors, etc – It can't all be chiefs and no Indians – There is an equally important place for both of them in America. Our leaders are supposed to be elected by the citizens of the United States of America to represent the interests of those citizens and the country itself – They are not supposed to be representing Wall Street, lobbyist, international corporations, the global marketplace (WTO, NAFTA, TPP, KORUS), foreign citizens, foreign interests or illegal aliens – And it's time that all of our so called leaders start honoring that fact.

Doogie Ann
Doogie Ann

Game goes on especially with obamy

David Bibo
David Bibo

Still waiting for the "trickle down" effect to impact the middle class. Reaganomics spawned the Bush economic meltdown. Please take the cowboy off Mt. Rushmore

Pete Smith
Pete Smith

Only the bottom 17% didn't pay federal income taxes under Reagan. Much fairer and shared burden back then.

Ray Randall
Ray Randall

Very, they were bragging about the low unemployment rate and there are the numbers they missed!

Kenneth J Conte
Kenneth J Conte

The unemployment rate is so far off its ridiculous ?.. The numbers are not refrlecting the actual people out ofd work. Most of the jobs created are low paying and not the type of income that one can support a family on ? Duh ?

Mike Leahy
Mike Leahy

Definitely not accurate! The media has to make the idiot in charge look good

Kathleen Morrissey
Kathleen Morrissey

Yes! What about all the unemployed after there benefits ran out! That are still trying to find a job?

Brian Strong
Brian Strong

Unemployment stats are a lagging indicator and its formula is antiquated, should be reformulated.

Kerri Kellerman
Kerri Kellerman

it's also (deliberately) skewed because if, for example, 10% of the population is collecting unemployment "benefits" for 6 months out of the year, they call it 5% unemployment. the claim that people looking for work are counted as unemployed is wrong. how does the federal government know if you submit a resume or application, or go to an interview?

John Luper
John Luper

I like to take a look at the amount of people still getting food stamps and other forms of assistance to determine how good the job data is. It's not an absolute method, but it gives you an idea of how healthy those job numbers really are or how well paying those jobs are.

Mark Welker
Mark Welker

after looking at some of the responses that are on this thread, I honestly have to say - anybody who thinks that they can use the labor participation rate as any kind of gauge of unemployment, needs to be demoted to the backseat of a short bus. you see these right wingers who try to claim there are 93 million people unemployed, because of the labor participation rate.... complete hogwash. we lose 10,000 baby boomers out of the labor force every day, because they retired... and have been now for about 8 years. people born in 1945, are now 70 years old. yet, I keep seeing this claim being made by right wingers about work force participation.... and their math doesn't add up. here is an article from the right wing propaganda bubble as an example..... http://m.cnsnews.com/news/article/ali-meyer/labor-force-participation-remains-36-year-low-0 CNS claims 93 million people not in the workforce..... last census, we had three hundred eight million people in the population of the United States. 114 million of these, are either under 18 or over 65. BLS says there is currently over 142 million jobs. 114+142=256 million people accounted for. this leaves 52 million people. 41,000,000 less then the claim. Now start deducting: stay at home moms... retired people under 65.. full time students... the three million people in prison... self employed people who are not counted by BLS... disabled people... people who are actually unemployed.... and a long long list of people that I haven't mentioned here...... and the fact is, there is not enough people in the entire United States to account for the amount of people that CNS claims in their article. to even get halfway close to that amount of people, you need to start adding people over 65 or under 18... ..... putting great grandma and grandpa to work, and breaking child labor laws. the article is crap. you might get a few people between 16 and 18, and a few more between 65 and 70.... but there are not many septuagenarians with a full time job, and you certainly cannot come up with over 1/8 of the population of the United States, that the number is short, before making the deductions I mentioned, to make that claim true.

Ruben Romero
Ruben Romero

unemployment rate is easy to calculate. What ever it is, double it and then add another 10% who are underemployed and another 10% who will take the dole for life or are so far out of it and are called the homeless...These stats are base solely on "gut"

Darryl Baker
Darryl Baker

It's not that the people don't want the training, it's that companies don't want to train them. I love seeing "entry level" jobs that require 3 years of experience

Bob Rea
Bob Rea

Both parties cook the books!!!

Harold Hauenstein
Harold Hauenstein

In college they teach a course in how to lie with statistics, This is one course that our government employees and political anilysts have all aced.

Pedro Rivero
Pedro Rivero

You guys just can't hang to far from the left csnt you independent voter

Ronald Wenick
Ronald Wenick

Ellen McMillan When you're actively looking, you're counted. And I responded respectfully, without name calling. You should try it.

Phil Spray
Phil Spray

Closer than anything that has come out of official government news releases,