Unemployment Dips to 8.5%, Lowest Rate in 2 Years
A jobs sign hangs above the entrance to the U.S. Chamber of Commerce building in Washington, D.C. Photo by Karen Bleier/AFP/Getty Images.
Friday’s unemployment figures are positive all around: The official unemployment number dipped to 8.5 percent, a rate the economy hasn’t seen since early 2009. The unemployed are spending a slightly shorter number of weeks jobless, there’s been a steady drop in new claims for unemployment benefits and 200,000 new jobs were added to the economy in November. And to round it out, our own broader measure of unemployment, U-7 (which celebrates its one-year anniversary Friday), dropped to 17.12 percent, the lowest since we began tracking the number. That figure, as well as a half-dozen others we track monthly, are below in our Solman Scale — all potentially good signs for the economy as we enter 2012.
Looking back on a year’s worth of unemployment data, we built an interactive graphic to show the trends in unemployment — the government’s official rate compared to ours. Click on the key at the bottom to isolate U-7 or the official rate, and roll over the data points to see more information.
Note: official unemployment rate based on revised figures released by the Bureau of Labor Statistics Friday morning. U-7 figures are as originally reported. Interactive by Justin Myers.
First, the official unemployment number may be deceptively low. This plays off an insight producer Lee Koromvokis and I first had in 2003, especially after discussions with MIT economist David Autor, and reported again in 2009. The deception may be in the huge number of Americans receiving Social Security disability insurance instead of working — 13.5 million or so working-age Americans, if I’m reading the Social Security Administration’s data correctly — plus another 2 million-plus incarcerated. That’s more people than the current official total of the unemployed.
So here’s a question: How many of these people might be unemployed if not for disability and prison? A New York Times article last April reported an estimate that 18 percent of the officially “disabled” would be able to work. I’ve heard off-the-record estimates from experts as high as 40 percent. In other words, we might add several million folks to both the 13.1 million already officially unemployed or the additional 13.2 million in U-7 were it not for Social Security disability insurance. There are also some 1.5 million more jailed Americans than in 1982, a great many of whom might be unemployed if back in the workforce. Bottom line? A lot higher unemployment rates, across the board.
Second observation: As we’ve also pointed out before, the Bureau of Labor Statistics data collectors are almost surely missing a lot of Americans when they take their monthly survey, and the folks they’re missing are likely to be disproportionately unemployed. That would bulk up U-7 more — and maybe the official number as well.
Third: None of these numbers reckon with the number of Americans who are working — but off-the-books. I’ve heard estimates for disability recipients ranging from 20% to as high as 50 percent. But almost all of these folks — and most off-the-books workers — are more than likely part-timers. If they would otherwise be looking for full-time work, as presumably most would, then they would be part of U-7 in any case.