The Real Unemployment Rate in February 2010

In December 2009, I started looking at the unemployment numbers from the Bureau of Labor Statistics in a new way to try to understand the number of missing jobs in our economy.  The usual unemployment rate only tells us how many people are actively looking for jobs now.  When a recession has lasted as long as this one has, many people are discouraged and have given up looking for a job.  This does not necessarily mean they do not want one.  Also, during a long recession and with a big available pool of unemployed, those who do offer jobs may very well not be offering the compensation that would draw some people into jobs when the economy is bustling.  For instance, now is a good time to do graduate studies or to take some time off professionally while raising children.

We had a time when the unemployment rate was low and when the economy was humming as we would like it to back in January 2000, before the dot.com and high technology crash of a couple of years later.  The unemployment rate was 4.04% then and the number of unemployed plus the employed was 67.49% of the total noninstitutional civilian work age population.  Using this 67.49% figure as the number of jobs wanted when the economy is good, we can calculate the number of jobs needed in February 2010 to satisfy the likely number of job seekers if the economy really were as good as that benchmark month of January 2000.  It turns out that this decade was really not very good for job creation even before this recession hit, since the comparative real unemployment rate had hit 7.01% already in December 2007, though the official rate was only 4.80%.  Apparently, jobs were already not very enticing to many and they were not looking for jobs even then.

The real unemployment rate by my criteria was 13.73% in December 2009 and it went up to 14.41% in January 2010.  But, as I noted a month ago in my post on the real January 2010 unemployment rate, there was a strange decrease in the number of the Total Noninstitutional Civilian Work Age Population from December to January of 92,000 people.  Was that due to many people retiring or due to a massive sweep-up of criminals off the streets?  I have no idea.  But, in February 2010, the BLS statistics say the number of Noninstitutional Civilian Work Age people is higher, not lower, than was the number in December 2009.  This is usually the case due to population growth.  There are 166,000 more potential workers in February than in January and 74,000 more than in December.  This is all based on the actual numbers before the BLS does any seasonal adjustments.  The numbers for the standard unemployment rate and for calculating the number of missing jobs benchmarked against January 2000 are given in the last column of the table:

Thus, it appears that there was a very small improvement in February compared to January in the percent of missing jobs, since January 2010 was missing 14.41% of the needed jobs.  While the number of people with jobs is fewer than in December 2009, that number is higher than in January 2010.  Still, a real unemployment rate of 14.22% is really, really bad.  Perhaps the Democrats should be less eager to pile myriad new taxes upon the private sector to fund their health care and energy plans!  Where is the effect of their "stimulus" jobs or their "green" jobs?

We need also to remember that in addition to the missing jobs, many of the employed are working shorter hours than they wish to or have taken pay cuts to retain their jobs in hard times.  According to the BLS statistics, in February, 9,282,000 people were working part time who wanted full time work.  This was 6.77% of those employed.  There were also 18,718,000 part-time workers due to childcare concerns, family obligations, school or training, retirement limits on earnings, and similar reasons not thought of as being due to the status of the economy.  However, a bustling economy would likely induce some of these people also to work full-time, rather than part-time.