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Government snapshot of joblessness too rosy a view, experts explain

By Thomas Olson
Sunday, July 24, 2011
 

The government considers Darlene Beward Perrotta gainfully employed.

But try telling that to Perrotta of Whitehall, who hasn't landed a full-time job since the YWCA laid her off two years ago.

"I'm working three part-time jobs, which is still not enough to support myself," said Perrotta, who goes without health insurance and struggles to pay her mortgage. "This is how you play the game to stay alive."

"If the situation doesn't change, I'll either have to sell my townhouse, or let it go," she said.

Perrotta's plight and that of others who are chronically underemployed fuels criticism by some economic and policy experts of the government's manner of calculating the "official" jobless figure.

The Bureau of Labor Statistics reported the unemployment rate reached 9.2 percent in June. But that counts part-timers, short-termers and the underemployed as holding regular jobs.

"The government's unemployment rate is rosier than it really is," said Alan Tonelson, research fellow at the Business and Industry Council in Washington. "I agree with analysts who are focused on the U-6 figure."

The U-6, unofficial rate — the most inclusive of the bureau's six jobless measures — rose to 16.2 percent in June, from 15.8 percent in May. That measure counts as unemployed those people "marginally attached to the labor force," including people who "had to settle for a part-time schedule," according to the bureau's definition.

The bureau's latest monthly report shows the nation had only about 3 million job openings for 13.9 million unemployed people in May.

"It's not that I'm not qualified. It's that there are too many of us looking for jobs," said Perrotta, who holds a bachelor's degree in education from California University and began working in the late 1960s. She makes $8 an hour as a part-time greeter/cashier at a restaurant.

David Heim of Monaca is marginally attached to the labor force, too. Despite holding three degrees — a bachelor's in computer science, and bachelor's and master's degrees in electrical engineering — he hasn't found full-time work since February 2009.

"When you have technical expertise, it's hard to find a job in that narrow band," Heim said. He's been turned away from technician and even entry-level positions for which he's over-qualified, "because they're afraid you'll leave."

"I've been living off my savings," said Heim, 53. He sometimes works as a part-time, substitute teacher at a trade school, "but that doesn't pay nearly enough."

Perhaps least understood is the labor bureau's practice of "seasonally adjusting" the monthly unemployment figures. It does so in order to minimize distortions — up or down — caused by seasonal hiring and layoffs.

For example, retailers add workers in November and December to gear up for Christmas shopping and then lay them off in January. Leisure and hospitality jobs jump in summer months at amusement parks, country clubs and other venues.

"Those general trends are consistent from year to year. So, to better understand how the economy is doing, we approximate what a normal month-over-month change would be," said Bradley Jenkins, an economist with the bureau's division of local area unemployment statistics in Washington.

Each month, the Census Bureau surveys 60,000 households across the country about work status, occupation and demographics. It gives the information to the Bureau of Labor Statistics, which adds employment data it collects from about 140,000 employers. Analysts compile the information, make seasonal adjustments and the bureau releases a national unemployment report on the first Friday of the month.

The bureau arrived at "normal" seasonal hiring and firing changes by analyzing data back to 1990, he said. For example, if retailers usually hire 38,000 people each November, and surveys show retailers this year hire 50,000, the bureau would report that retailers added 12,000 workers on a seasonally adjusted basis.

"It's better to seasonally adjust the figures. It gives you a better picture of what's going on," said Antony Davies, associate professor of economics at Duquesne University's A.J. Palumbo School of Business.

"Seasonal adjusting is not perfect, but BLS generally does a good job," said James Sherk, senior policy analyst in labor economics for the Heritage Foundation, a conservative policy group.

At the state and local level, agencies such as Pennsylvania's Center for Workforce Information & Analysis make similar seasonal adjustments, said Christopher Magaro, labor market analyst at the center.

Most recently, the center reported the seven-county Pittsburgh area lost 4,600 jobs in May, when the seasonally adjusted employment level stood at 1,135,100. The unemployment rate, also seasonally adjusted, was 7 percent, up from April's 6.8 percent.

"Pennsylvania is doing better than the nation, and Pittsburgh is doing better than the state," said Mark Price, labor economist at the Keystone Research Center in Harrisburg. "But we don't have enough jobs. There's too much slack in the job market."

If the Bureau of Labor Statistics has a data problem, Tonelson said, it's that it defines the private sector too broadly because it includes "parts of the economy that are heavily subsidized by government." That includes health care, defense and much of social services and higher education.

"The country's strength in private-sector job creation is considerably weaker than it's been reported," he said. "Many of the jobs created since the end of the recession (July 2009), for instance, have been in health care services."

"This economic recovery has been juiced by massive government stimulus, from TARP (Troubled Asset Relief Program) to the Big Three auto bailouts to a federal funds rate of practically zero," Tonelson said. "And I don't think the economic community has done a very good job of describing this."

 

 
 


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