Unemployment Numbers Return to the Reagan Era
Thursday, July 02, 2009SUSIE GHARIB: The nation's labor market is now in its worst shape since Ronald Reagan was in the White House. The unemployment rate notched up to 9.5 percent in June. Stocks sold off on that news, with the Dow falling 223 points. Last month, employers slashed 467,000 jobs from payrolls, far more than expected. But as Suzanne Pratt reports, that headline number -- 9.5 percent -- may not tell the true story of just how many Americans are out of work.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Chad Brown is a writer, but lately, he's been temping as a receptionist. While he'd rather be working full-time in his field, he's happy to have a job.
CHAD BROWN: My main focus is having a daily routine, get up, go somewhere, do my job and then be able to have money A to pay my bills and B, to have a life, both of which. It has helped get the creditors off my back a little bit.
PRATT: Brown is part of a large and growing group of under-employed people. While the government tracks those folks, it doesn't include them in the headline unemployment rate known as U-3, which is now 9.5 percent. To get a broader snapshot of the labor picture, experts say you need to focus on what's known as U-6. It includes that headline rate, plus the under-employed, plus those who recently stopped looking for a job but still want one. Today, we learned U-6 is an eye- popping 16.5 percent. That means one out of every six members of the civilian labor force is out of work or not fully employed. Economist Conrad Dequadros says watching U-6 is helpful in a recession for trying to get a sense of consumer spending.
CONRAD DEQUADROS, SR. ECONOMIST, RDQ ECONOMICS: It includes people who are not considered in the labor force because they are not looking for employment. So, it's just broader. I wouldn't say it's more accurate. It could be more relevant when it comes to trying to determine the path of household activity and consumer activity.
PRATT: But economist Stephen Gallagher says focusing on U-6 over dramatizes current job market conditions.
STEPHEN GALLAGHER, CHIEF U.S. ECONOMIST, SOCIETE GENERALE: We have a horrible unemployment rate at 9.5 percent. It's going up to 10, 10-plus percent. I don't know if we need to add bells and whistles on it to make it sound even worse than it is.
PRATT: Just as the official unemployment rate is expected climb higher, so too is U-6. Some experts fear it could reach a whopping 20 percent by next year. That would come as no surprise to Atrium Staffing, a Manhattan-based employment firm. CEO Rebecca Cenni says more and more companies are using part-time hires.
REBECCA CENNI, CEO, ATRIUM STAFFING: They're actually looking to put people in part-time positions that would normally dictate Monday through Friday, 9-to-5 jobs. Now, they're calling them in and asking for people to work Monday, Wednesday, Thursday from 10:00 to 4:00. They're looking to get as much as they can for as little as they can.
PRATT: No matter which measure of unemployment you watch, economists agree labor market conditions are simply terrible. And while the recession may end later this year, it could take well into next year before the unemployment rate finally peaks. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
