The national unemployment rate includes in its count more than just persons receiving unemployment insurance. All jobless persons who are actively seeking work are included, whether or not they are receiving unemployment insurance (UI). Additionally, temporarily laid off individuals are included in the count, even if they are not actively seeking work. People who are unemployed and want to work, but are not actively looking for work, are not included in the unemployment rate count.
Long-Term Unemployed persons are jobless individuals who have been searching for work for 27 weeks or more (6 months or more). The Long-Term Unemployment Count for May (of 2015) held at 2.5 million, or 28.6% of the total unemployment count. This may seem high, and it is, but at least this number is down 849,000 from last May (2014).
1.9 million people are marginally attached to the work force, which means they are jobless, available to work, want to work, but are NOT actively seeking work. Out of those 1.9 million, 563,000 are considered discouraged workers, which is defined as persons who are not currently looking for work because they believe there are no jobs available for them. In line with being marginally attached, discouraged workers are not actively seeking work. Marginally attached and discouraged workers are NOT included in unemployment counts because of the fact that they are not actively seeking work.
Typically, when there is a spike or decline in unemployment rates, the number of marginally attached persons tends to rise and fall at a similar rate. The same goes for those who are working part-time for economic reasons, sometimes referred to as involuntary part-time workers.
The unemployment rate, the number of marginally attached persons, and the number of involuntary part-time workers all skyrocketed in 2008 at the onset of the Great Recession. However, unlike the steadily decreasing unemployment rate, the number of marginally attached persons has remained fairly consistent, with only a 10% drop since December of 2012, compared to a 24% drop in unemployment since December of 2012.
Finding employment becomes less and less likely the longer you are unemployed.
|Month||Actual UE Rate||Previous UE Rate||Forecast UE Rate|
Between December of 2007 and October of 2010, the United States lost over 7.8 million jobs to the Great Recession. By 2014, the amount of job loss had declined, but a large gap in the market remains between the number of jobs available and the number of potential workers. This has caused the current labor market to be 5.6 million jobs short of what would be needed to keep up with the growth in the potential labor force.
Furthermore, the recipiency rate of unemployment insurance fell to 23.1% in December of 2014, marking this time as the lowest UI recipiency rate since 1984. The recipiency rate is calculated by the proportion of jobless workers receiving unemployment benefits from state agencies.
While the overall unemployment rate and the long-term unemployment rate may be down, it's important to recognize that this does not necessarily mean the case for unemployment is any better now than it was a few years ago. At the end of 2014, the national black unemployment rate reached 11%, a rate higher than any national unemployment rate from US history. While the United States currently enjoys a 5.5% national unemployment rate, the Black unemployment rate is expected to decline to only about 10.4% by the end of 2015.
Because long-term unemployment rates have significantly declined for some groups while other groups continue to grapple with sky-high unemployment rates, any decline in unemployment rates may be just as well attributed to workers dropping out of the labor force, rather than more workers becoming employed. Declining unemployment without an increase in the number of workers from a diversity of populations may reflect the fact that many of these workers are leaving the workforce rather than becoming employed - as evidenced by the tremendously high unemployment rates plaguing many groups of workers.
Therefore, true improvements to the labor market can be found in states where the unemployment rate is declining AND the number of workers being employed from a range of backgrounds and groups is increasing. Otherwise, the overview of unemployment may be distorted by misinterpreting a declining UE rate for an improved labor market.
Some suggest the reason for this gap between the decreasing unemployment rate and the stagnant amount of diverse representation in the labor force is due to the stunted growth of nominal wages. The absence of higher wages that keep up with the growth in potential labor force alongside economic fluctuations discourages many workers from remaining attached to the work force.
According to Wilson, "policies aimed at achieving full employment, as opposed to simply returning to the pre-Great Recession status quo, raise the bar to a point at which all who are willing to work at the prevailing wage rate are employed."