This essay first appeared in Newsday. The unemployment rate fell again in August, to 7.3 percent, down from 8.1 percent a year ago. Time to celebrate, right? That must mean 92.7 percent of adults are employed! Good times!
Well, not exactly. The unemployment rate only measures people who have actively looked for work in the past four weeks. It's a tremendously deceptive measure that ignores millions of discouraged and freelance workers, yet the U.S. Bureau of Labor Statistics has been using it since the 1940s. In fact, the labor force participation rate - the percent of the U.S. adult population that has a job - isn't anywhere near 92.7 percent; last month, it was 63.2 percent, nearly the lowest level in 35 years. Good times?
The official unemployment numbers mask a couple of trends - one undeniably bad, but one potentially good. A significant group that isn't counted in the unemployment rate comprises people who've given up looking for work - so-called discouraged workers. Some aging workers have retired early and unwillingly, after finding that many employers won't hire people in their 50s, 60s or 70s. A friend in investment banking tells me he never runs into anyone older than 60.
With people living longer, those who retire before they're ready may not live as securely as they'd hoped. Few baby boomers can rely on a pension. Also among discouraged workers are the 4 million-plus who have been unemployed for six months or more. Between 1948, when the government began keeping these records, and 2009, this group had never numbered more than 2.9 million. Federal Reserve Chairman Ben Bernanke has called long-term unemployment a "national crisis."
Yet another group is discouraged college graduates who couldn't find work and went back to school for a graduate degree, hoping to return to the job market in better times. They're putting off doing many of the things that would stimulate the economy, like buying homes, cars - and Baby Bjorns. We need a better way to measure joblessness, so there is sufficient pressure on political leaders to further job creation.
Vermont independent Sen. Bernie Sanders told MSNBC last week that talk of war in Syria is a distraction from our needs at home. "[The] truth is that a largely dysfunctional Congress has difficulty today focusing on the very serious issues facing our country: the disappearing middle class, high unemployment, low wages, the high cost of college, the decline of our manufacturing sector and the planetary crisis of global warming," Sanders said. "I fear very much that U.S. involvement in another war in the Middle East, and the cost of that war, will make it harder for Congress to protect working families."
Now, for the promised better news: There are many more people working than the Labor Department tallies. According to Sara Horowitz, founder and executive director of Freelancers Union, official numbers haven't kept up with the changes in the new workforce. Blogging at freelancersunion.org, Horowitz argues that the government ignores people who have abandoned the 40-hour workweek and instead work project to project. She estimates that 42 million people are independent contractors, nearly a third of the workforce.
This is, potentially, a very good development. It gives individuals more control over their time - hello, work-life balance. And companies may be more willing to pay project by project, rather than commit to hiring employees with all the attendant retirement and health benefits.
Good jobs with benefits are the ideal, of course. But even a freelance boom is better than a modest dip in a bogus unemployment rate.