Real Unemployment Shows US Economy Short 20 Million Jobs

04/01/2011 03:55 pm ET | Updated Jun 01, 2011
  • Steve Clemons Washington Editor at Large of The Atlantic and founder and senior fellow of the American Strategy Program at the New America Foundation.

leo hindery and steve clemons.jpg

While growing up on US military bases, one of the perennial radio personalities that the Department of Defense would transmit to us wayward DoD dependents was Paul Harvey and his show, The Rest of the Story. I liked the setup of the program -- always showing his captive audience that there was more to things than what the government or some corporation was spinning.

America's unemployment statistics have their own Paul Harvey -- but his name is Leo Hindery.

Every month, media business executive and former Obama for President finance committee member Leo Hindery puts out a very detailed memo breaking out the national unemployment data -- showing what is real and what is not regarding the Bureau of Labor Statistics' monthly release of jobs data.

One of the chief data abuses that Hindery has focused an enormous, hot, raging spotlight on is the giant gap between official unemployment (now pegged at 8.8% of the population) and "real unemployment" which Hindery documents at 17.7% of the population.

Hindery points out that the US economy is 20.2 million jobs short of what it needs for full employment.

In his figures, Hindery accounts for "discouraged workers" who just stop trying to get new jobs and those who are "under-employed", i.e., partially but not completely employed.

I've read these memos every month and try to post them when I can. Hindery has changed the national discourse with this framing of unemployment -- and more and more national economic and political commentators are using his term of real unemployment. Even today when I was listening to the Diane Rehm Show on National Public Radio, one of the commentators made the point that the government data wasn't only a function of workers who were discouraged falling off the radar screen but actually there was some real hiring and adding of people to payrolls.

This is the Leo Hindery effect, and I applaud him and his team for working so hard to distribute these figures every month.

So here is the Leo Hindery Report on US Real Unemployment for March 2011:


The Bureau of Labor Statistics (BLS), using its Current Population Survey of non-farm jobs, announced this morning that in March 2011 "U.S. employers increased non-farm payrolls by 216,000 jobs, including 230,000 private sector jobs added in the month versus an adjusted upward 240,000 increase in February. The 'official' unemployment rate edged down to 8.8% from 8.9%."

The consensus expectation was for 195,000 new private sector jobs, versus the 230,000 that were announced. The BLS also identified 13.5 million unemployed workers.

The monthly BLS announcement regarding unemployment, however, as we note each month:

1. Uses only a "survey of households" rather than much more accurate payroll data;

2. Excludes changes in employment among the nation's 11.0 million farm and self-employed workers; and

3. Most important, does not take into account the 14.7 million workers who are:

i. "part-time-of-necessity" (i.e., underemployed) because their hours have been cut back or they are unable to find a full-time job (8.4 million);

ii. "marginally attached" to the labor force because while wanting a job, they have not searched for one in the past four weeks because of availability, skill or personal reasons (2.4 million); or

iii. "discouraged" and who have removed themselves from the labor force although they "currently want a job" (3.8 million).

Our Summary of U.S. Real Unemployment [attachment 1] makes these three adjustments. It also identifies average weeks unemployed, job openings, and the all-important "Jobs Gap" that needs to be filled in order to be at full employment in real terms. With the three adjustments made, in March:

· The number of real unemployed workers in all four categories - official BLS, part-time-of-necessity, marginally attached, and discouraged - decreased by 193,000 workers to 28.2 million, which remains more than twice BLS's official figure of 13.5 million. Significant changes in real employment included: private service-providing sector employment increasing by 199,000 jobs; manufacturing increasing by only 17,000 jobs; construction employment flat after increasing by 37,000 jobs in February; and government employment, mostly local, again declining, this month by 14,000 jobs.

· The real unemployment rate is 17.7%, compared to last month's real unemployment rate of 17.8% and to BLS's dramatically lower 'official' rate of 8.8%.

· The number of real unemployed workers has increased by 11.5 million since the start of the Recession, and just since December 2008 by 3.7 million. The latter figure and the Jobs Gap figure that follows are of significant political import, since the economy needs to add at least 150,000 new private sector jobs each month simply to keep up with population growth.

· The Jobs Gap, in real terms, is 20.2 million.

(Some in the national press, notably the New York Times, when commenting on real unemployment, still leave out those discouraged workers who while wanting a job have removed themselves from the labor force. Yet this remains a huge category (3.8 mm) and arguably the most 'unemployed' of the four categories. The all-in real unemployment rate of 17.7% drops to 15.7% when these workers are not included.)

The average number of weeks unemployed is at least 39.0 and the number of workers unemployed a half year or longer is at least 9.9 million (i.e., BLS's official figure of 6.1 mm plus the 3.8 mm discouraged workers). Each figure remains unprecedented in modern times, and when considered together, they are always a much better measure of the real employment condition than the commonly used weekly "initial jobless claims" number.

Compared to other nine recessions and recoveries since the Second World War, the Great Recession of 2007, which very much continues especially for the long-time real unemployed, remains hindered by our nation's large trade deficit in oil, the large and again growing manufacturing trade deficit with China, and federal tax policies that continue to dissuade job creation here at home.

Kindest regards,

Leo Hindery

More soon on America's economic challenges.

-- Steve Clemons