TOPICS > Economy

Many Left Uncounted in Nation’s Official Jobless Rate

July 2, 2009 at 12:00 AM EDT
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Paul Solman examines how the number of jobless people who fall outside of official unemployment counts offer a different picture of the nation's economic recovery.

JIM LEHRER: Next tonight, a Paul Solman report on the true magnitude of unemployment in the U.S. We heard earlier about the traditional, familiar jobless numbers, but there are other numbers suggesting the problem may be even worse. It’s part of Paul’s ongoing series on making sense of financial news.

PAUL SOLMAN, NewsHour economics correspondent: In Chicago, Ebony Allen, on her way to a job interview on the south side of town, a tough trek in an economy with official unemployment at 9.5 percent, especially since, as this story will show, many think the real number is a lot higher than that.

How many interviews like this do you get, say, in a month?

EBONY ALLEN: One, and I need to pray for that one if I get that one.

PAUL SOLMAN: Downtown, job expert John Challenger says the numbers are far worse than you hear.

JOHN CHALLENGER, challenger, Gray and Christmas: The underemployment rate, which includes those people who are in part-time jobs but would prefer a full-time job, and those people who weren’t counted as unemployed but they’ve been out of work and been looking in the last year, but not in the last month, pushes the rate way up.

PAUL SOLMAN: Here are the new numbers from the Labor Department’s monthly survey of 60,000 households. The official number is what the government reports as U-3, 14.7 million unemployed as of June. That’s 9.5 percent.

U-4 adds discouraged workers who’ve stopped looking. That would make unemployment 10 percent.

U-5, marginally attached workers who say they’d take a job, but haven’t looked in a month. The number would then be up to 10.8 percent.

The most inclusive number, U-6, adds part-timers looking for full-time work, bringing the total to 16.5 percent.

Ebony Allen hasn’t worked at all in two years. No wonder Margo Strotter’s first impression matters.

MARGO STROTTER: Tell me a little bit about yourself.

EBONY ALLEN: I’m a diligent person, very punctual. I have good people skills.

Tough job market for men

PAUL SOLMAN: It's tough enough for women in this jobless market. With construction and manufacturing so hard hit, though, it's tougher still for men.

JOHN LEONE: My name is John Leone. I'm a lean manufacturing engineer. I've been looking for work since September of 2008.

JOHN KESSBERGER: My name is John Kessberger. I was laid off in October of 2008. I'm a senior engineer in manufacturing.

PAUL SOLMAN: A networking group for out-of-work executives in Bolingbrook, a Chicago suburb.

CHRIS DEMAIO: I'm Chris Demaio. I've been out of work since December of 2008, and I'm a senior financial executive.

JOHN FRECH: My name is John Frech. I'm a senior audit executive from the banking industry. I've been in transition since January of this year.

BHARATH TOLAPPA: My name is Bharath Tolappa. I'm an I.T. infrastructure professional, and I have been looking since January of this year.

BARBARA TOMCZAK: My name is Barbara Tomczak. I'm a human resource leader. I've been in transition since February 2008.

JOHN LOPATA: I'm John Lopata. I'm an inventor with 38 United States patents. I've been out of work since January of 2008.

PETER STURDIVANT: I'm Peter Sturdivant. I work in heavy civil construction. I've been looking for a new position for a year.

PAUL SOLMAN: Every U category was represented here, including discouraged workers, if you count the one member of the group too discouraged to show up and take his seat next to Peter Sturdivant.

PETER STURDIVANT: He just seems he's at a dead-end. He's been looking for a long time. He's discouraged. We had talked about this especially at the last meeting, when we felt that it wasn't just the normal roller-coaster cycle at the bottom, but it might have been the beginning of a spiral.

PAUL SOLMAN: And then you stop looking for work entirely -- you're a discouraged worker -- and you're not in the labor force at all, and then you're not part of the unemployment number?

PETER STURDIVANT: That's correct.

Involuntary part-timers

Bob Zawacki
I was lagging behind a little bit. And my boss mentioned it a couple of times, nothing serious, but it came to the point where he just came up to me one day and said, "We've got to let you go."

PAUL SOLMAN: John Lopata and John Frech, meanwhile, are part of the biggest undercounted group: involuntary part-timers.

JOHN LOPATA: I worked with the U.S. Census from March until May, and I typically averaged about 30 to 35 hours a week in that period of time.

PAUL SOLMAN: Were you looking for full-time work at that point?

JOHN LOPATA: I was still looking for full-time work.

PAUL SOLMAN: And what about you, John?

JOHN FRECH: I was able to secure an adjunct teaching professor opportunity. I'm averaging about 15 hours a week with that assignment and looking for full-time work at the same time.

PAUL SOLMAN: Though they consider themselves unemployed, neither man is in the official tally, but only in the rarely mentioned U-6, a category they share with millions of itinerant workers and so-called consultants, like Barbara Tomczak, who's freelanced since losing her job a year-and-a-half ago.

BARBARA TOMCZAK: I'm an independent contract worker.

PAUL SOLMAN: So as much as half this group isn't counted as unemployed, if you include the discouraged guy who failed to show. No wonder they think the unemployment rate is higher than reported.

Who here thinks it's higher than 12 percent, 15 percent, 20 percent? How many people think it's 20 percent?

And 20 percent may not be far-fetched, it turns out, because of two other groups never counted as unemployed. One is those on government disability: 7.5 million Americans, like 57-year-old Bob Zawacki, a Chicago carpenter.

BOB ZAWACKI: I've had arthroscopic surgery in my knee twice, and I've got prominent hearing loss. I've got a progressive problem with my neck, my cervical spine, and I have stenosis, or a degenerative disc disease. And when you've got to deal with that pain throughout the day, it starts to affect your mind. You're not a happy camper, as much as you would normally be, you know?

PAUL SOLMAN: By a year ago, Zawacki's injuries were becoming apparent.

BOB ZAWACKI: So I was lagging behind a little bit. And my boss mentioned it a couple of times, nothing serious, but it came to the point where he just came up to me one day and said, "We've got to let you go."

Social Security disability

PAUL SOLMAN: Then came the Great Recession. He applied for Social Security disability, roughly equal to retirement benefits, though a drastic reduction in take-home pay.

If jobs were out there now, would you take one instead of applying for disability, even given your neck and all the rest?

BOB ZAWACKI: Yes, I would go for a job. And it might be even contrary to what my doctors advised me to do, which means, you know, I'd be bringing more harm on myself, but it's more money.

PAUL SOLMAN: Many think the burgeoning government disability program, paid for by Social Security, is a good thing, in part because, without it, unemployment would be even higher than it is?

TOM NASH, disability lawyer: I think that's fair to say, absolutely, yes.

PAUL SOLMAN: Tom Nash is Zawacki's lawyer. He says the baby boom has been driving the disability boom and expanding his business.

TOM NASH: Because disability is driven by age and the rules are essentially that the older you are and the more that you've had a history of heavy work, the more likely it is that you'll become disabled. Ten thousand baby boomers turn age 50 every day.

PAUL SOLMAN: In fact, 2.5 million people have applied for Social Security disability in just the past year. Many of the 50 percent who figure to get it would otherwise be counted as unemployed, and the same goes for folks like these.

INTERVIEWER: How do I know I can trust you?

JOB APPLICANT: I say, if you give me 10 percent of your trust, I'll do my earnest to earn the other 90 percent.

PAUL SOLMAN: At Chicago's Safer Foundation, they help ex-convicts get jobs, conducting mock interviews to prepare for the real thing.

INTERVIEWER: You checked on your application you've been convicted of a crime. Can you elaborate on that for me?

MICHAEL DAVIS: Yes, I can, Ms. Belle. I'm glad that you asked.

Joblessness in prison populations

Diane Williams
At the same time that they're talking about reducing the numbers of people in prison and sending them home, they're also talking about significant cuts in the services that are available to people when they're released from prison.

PAUL SOLMAN: There are 2.25 million Americans locked up at the moment. Their unemployment rate, were they out and looking for work? Safer Foundation President Diane Williams.

DIANE WILLIAMS, Safer Foundation: I would say it would be upwards of 80 percent that would not be able to find employment.

PAUL SOLMAN: And that estimate may soon show up in the numbers. Illinois, like so many states, has a budget deficit that must be remedied.

DIANE WILLIAMS: One of the solutions for this unbalanced budget is to release people with low-level offenses back into the community. That could be anywhere from 7,000 to 10,000 people.

At the same time that they're talking about reducing the numbers of people in prison and sending them home, they're also talking about significant cuts in the services that are available to people when they're released from prison.

PAUL STEPHENSON: I've been locked up over half my life.

PAUL SOLMAN: Paul Stephenson did time for armed robbery.

PAUL STEPHENSON: You know, nobody wants to hire me, you know, because there's things on my background. You know this. It's terrible, but I'm not that person anymore.

MICHAEL DAVIS: Just because we have a background does not necessarily mean that we are monsters.

PAUL SOLMAN: Michael Davis was convicted of sexual assault.

MICHAEL DAVIS: We are trying to make a living, and we're trying to make a change to be better people, and we just need help.

PAUL SOLMAN: But even with help from places like the Safer Foundation, the odds aren't good. Seven to ten thousand released prisoners in Illinois would translate into hundreds of thousands nationally, most of them presumably added to the unemployment rolls.

And if those on disability were also looking for work, well, the 20 percent unemployment guess of the network executives starts to sound pretty plausible after all.

As for Ebony Allen, well, as it happens, she, too, is part of the Safer Foundation program, having served 18 months probation for drug dealing.

PAUL SOLMAN: What'd you like? What'd you like less?

MARGO STROTTER: The fact that she came presentable. I get a lot of folks that come in blue jeans and that kind of thing, and she communicated very well. She was on time.

The only thing I didn't like, I guess, is that I get that same pat answer all the time. "I've got good people skills, customer service," and I really need to see that happen rather than kind of take her word for it.

PAUL SOLMAN: Good luck.

EBONY ALLEN: Thank you. All right.

PAUL SOLMAN: But in the end, Ebony Allen didn't get the job. She remains one of America's 14.7 million officially unemployed as of this month.

JIM LEHRER: On our Web site, you can find the Patchwork Nation map, which shows changes in jobless numbers around the country over this past year.