5% unemployment is a lie

For Quartz, I wrote about the very misleading 5% unemployment rate, a statistic which discounts 1) the long-term unemployed and the lowered labor participation rate 2) the explosion of the low-paying, unreliable “gig economy” 3) the proliferation of low-wage jobs in place of middle-class jobs with benefits:

There are three main reasons the vaunted economic recovery still feels false to so many. The first is the labor participation rate, which plunged at the start of the Great Recession and discounts the millions of Americans who have been out of work for six months or more. The second is “the 1099 economy,” a term The New Republic’s David Dayen coined to refer to the soaring number of temps, contractors, freelancers, and other often involuntarily self-employed workers. The third is a surge in low-wage service jobs, coupled with a corresponding decrease in middle-class jobs.

Employment statistics in particular have a habit of eclipsing the real story. As any worker will tell you, it is not the number of jobs that matters most, but what kind of jobs are available, what they pay, and how that pay measures against the cost of living. The 5% unemployment rate, other words, is hiding the devastating story of underemployment, wage loss, and precariousness that defines life for millions of Americans.

Since 2008, the labor participation rate has fallen from a high of 67.3% in 2000 to 62.6% today. That 62.2% represents a 38-year low, which puts Bloomberg’s claim of a 42-year-low in joblessness in perspective. The jobless number is “low” only because more people are no longer considered to be participating in the workforce.

Read the whole thing at Quartz

 

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