Unveiling the actual US unemployment data

Recovery problem: job rate’s pulse is weak, statistics are misleading, and the construction sector –that in 2004 created 14% of the jobs but last year didn’t reach 3%,– looks gloomy.

WASHINGTON | According to provisional statistics, the US created 200,000 jobs in December and 1.64 million around 2011, being 2011 the best since 2006 in terms of job creation. The employment forecast for 2012 is 2.1 million –unemployment rate ended the year at 8.5 percent, the highest in 23 months. In fact, putting those two figures together, as media usually do, is like comparing apples and oranges. Job creation is a result of the Establishment Survey sent to 140,000 companies. And the unemployment rate of Households Survey (Survey of Families), is similar to Spanish’ EPA. In other words, job creation measures hiring levels; and the unemployment rate those Americans who are unemployed but actively looked for a job in the last four weeks.

This disparity explains why, for example, last November the US created 120,000 jobs and the unemployment rate fell four tenths (from 9 to 8.6 percent). Also that 200,000 new jobs were created in December and unemployment came down by 0,10 percent.

What is this all about? It’s simple: there are fewer workers looking for jobs. In the US there are 6 million less working people than when the crisis started in the third quarter of 2007. That is the reason why working population (the number of people of working age that actually have a job or are looking for one) fell in November and December despite the improvement in unemployment figures.

That leads to another question that can be explained with acronyms: U-2 and U-6. The first is referred to the official unemployment rate. The second includes the U-2, plus those part-time workers who would like to get a full-time job (note that in America part-time workers don’t get health insurance), and those who have not looked for a job for the last four weeks but in the last 12 months. U-6 measures the underemployed, the unemployed and ‘discouraged’ workers –because they have lost all hope and are just looking for eventual jobs. Last December U-6 was 15.2% and it would be another way of putting unemployment in the US.

UNDERUNEMPLOYED

Aparna Mathur and Matthew Jensen, from the republican think tank American Enterprise Institute, have compared the historical evolution of U-2 and U-6 with amazing results. From 1984 to 2007, the difference between the two measurements was between four and five tenths. The huge difference nowadays between them is unprecedent. It clearly shows that America has a large underclass of long-term unemployed citizens who cannot find jobs. What is the reason for it? Basically the very nature of this crisis. Construction sector is plummeting. This sector created 300,000 jobs in 2004, 14% of the total. In 2011 it only generated 47,000, which is a mere 2.9%.

Thus, the US is facing a complex recovery problem: without jobs and homes –everything that used to create employment in the last decade,– many low-skilled workers  haven’t got any career opportunities. More important than the weakness of Europe or the disagreements between Democrats and Republicans, is that the US has a great mass of underemployed population that doesn’t even count in the statistics, and this is slowing its recovery.

About the Author

Pablo Pardo
Pablo Pardo is Washington DC correspondent of El Mundo. Journalist especialized in International Economics and Politics.

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