What You Need to Know about the Hidden Recession
By Unemployment-Extension.org | May 2, 2015 at 9:50 AM |
While there has been much written about the country's emergence from the recession and the economic recovery, the headlines do not always reveal the true state of the unemployment situation in the United States.
The number of unemployment claims submitted by individuals who have been recently laid off is a critical indicator that is intended to provide a glimpse into the country's employment condition in real time. That is not always the case.
All Is Not as It Appears in the Official Unemployment Figures
For instance, the Bureau of Labor Statistics recently reported that less than 2,000 jobs were lost in the oil and gas industry. That news came as a shock to individuals involved in that industry. Ultimately, it was determined that those figures were a significant underestimation of what was taking place. Reported by Challenger, Gray & Christmas, the number of jobs lost in the energy sector was closer to 21,300 during the month of January. The state of Texas alone accounted for almost 20,000 of those jobs lost due to oil prices tumbling.
The situation in the energy sector is fairly representative of what is taking place in the country's employment situation overall. While the country tends to focus on the number of new jobless claims filed each week, those numbers are not a accurate representation of what is taking place in terms of the number of people who are actually out of work.
For instance, while headlines have continued to tout that the number of initial jobless claims has reached record lows, those numbers do not encompass the number of people who have been out of work for 27 weeks or longer. The Brookings Institute reported that the percentage of unemployed who have been without work for more than six months remains in excess of the previous peak reached during the early 1980s. Further, complicating matters is the fact that the long-term unemployed tend to remain on the fringes of the labor market, suffering from diminished employment prospects.
At the same time, economic data indicates that jobless claims are on the rise. According to The New York Times, the number of individuals filing new claims for unemployment benefits recently increased for the third consecutive week. Contributing to such slow growth was an unusually harsh winter, labor disputes on the West Coast, and weak global demand.
Not Everyone Is Working Full Time
The unemployment condition in the United States is further hampered by the fact that while some unemployed workers may have obtained work and are no longer on the unemployment rolls, that does not mean those workers have obtained full-time employment. CNN Money reported that some 7 million workers in the United States are unable to get full-time work and consequently are stuck in part-time jobs.
The report indicated that while the unemployment rate in the United States has declined sharply, there are still countless people who are only able to locate part-time jobs. Such involuntary part-time unemployment further contributes to a problem of hidden unemployment in the United States. Such unemployment is not counted in the official unemployment figures.
While the BLS continues to report moderately low jobless numbers, in reality the situation is not quite so optimistic when it comes to the country's actual economic situation. One of the reasons for this is that not only does the BLS not count those individuals who remain out of work but who are not initial claimants, but many other groups are also not counted.
A prime example of this includes independent contractors who may have been laid off from their jobs but who are not eligible to file for jobless benefits. Consequently, the data reported for first-time unemployment claims do not typically include the displacement of all workers from the American labor force. This means that unless one adds all of the farm workers, independent contractors, and long-term unemployed to the payroll numbers, it is difficult to get an accurate idea of the bigger picture. This has produced a “hidden recession.”
Hidden behind the typically reported indicators and data, such a hidden recession continues to exist within the gap between being employed and having a job that pays enough.
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