Public Comment

The Unemployment Issue: The Good News Is Really Bad News

Harry Brill
Friday June 12, 2020 - 02:06:00 PM

Probably most of you are aware that the unemployment rate reported monthly by the Department of Labor (DOL) appreciably understates the actual unemployment rate. But what we have recently learned is especially astonishing.

The good news reported by the DOL to the mass media is that the workforce gained 2.5 million jobs in May. That’s because the official unemployment rate presumably declined from 14.7 percent in April to 13.3 percent in May. However, some insider leaked to the media what really occurred. Actually, the May unemployment rate had not decreased. Instead, it increased by 3 percent, 

So the real rate in May, then, was not 13.3 but 16.3 percent. So rather than the labor force increasing by over 2 million, more than 2 million jobs were lost. Because the evidence was irrefutable, the DOL has been forced to acknowledge its “mistake”. 

The agency, however, claimed that the miscount was only an error, which it called a “misclassification error”. But it is highly unlikely that the agency mistakenly miscounted as employed 4.9 million unemployed workers in May. 

Among the so called mistakes were unemployed workers caring for a child, taking a vacation, and serving one morning on jury duty. It is quite a jump classifying these worker as gainfully employed. The DOL admitted that for the last two months it was aware of the problems. Nevertheless, the agency did not take the opportunity to make the necessary adjustments. 

About the so called new jobs created in May, a substantial number, 40 percent, are part-time. These jobs are low paying-- averaging about 30 percent less than full-time jobs-- and rarely provide benefits. 

But even more troublesome from a labor market perspective is how these jobs are being created. It is not only that among the new jobs reported are also these marginal positions. Actually, what has been occurring more frequently, are employers converting their full time jobs into part-time work. In other words, each full time job becomes at least two part-time jobs. So the growth in the size of the labor force increases considerably. It looks good. But statistically speaking, no additional value has been added. 

The DOL management owes both the public and the thousands of its hardworking and dedicated employees a commitment to doing an honest job.