9.1% unemployment rate only hints at real U.S. jobs picture

9.1% unemployment rate only hints at real U.S. jobs picture

Paul Wiseman and Christopher Leonard
Associated Press
Sunday, Sep. 04, 2011

WASHINGTON -- The job market on Labor Day 2011 is even worse than the 9.1 percent unemployment rate suggests.

The 14 million unemployed Americans aren't competing just with one another. They must also contend with 8.8 million other people not counted as unemployed -- part-timers who want full-time work.

When consumer demand picks up, companies will likely boost the hours of part-timers before they add jobs, economists say. It means they have room to expand without hiring.

And the unemployed will face another source of competition once the economy improves: roughly 2.6 million people who aren't counted as unemployed because they've stopped looking for work. When they start looking again, they'll be classified as unemployed. And the unemployment rate could rise.

Intensified competition for jobs means that unemployment could exceed its historic norm of 5 to 6 percent for several more years. The nonpartisan Congressional Budget Office expects the rate to exceed 8 percent until 2014. The White House says it will average 9 percent next year, when President Barack Obama runs for re-election.

The jobs crisis has led Obama to schedule a major speech Thursday night to propose steps to stimulate hiring. Republican presidential candidates will likely confront the issue in a debate the night before.

Last week, the government said employers added zero net jobs in August. The monthly jobs report, arriving three days before Labor Day, was the weakest since September 2010.

Combined, the 14 million officially unemployed, the "underemployed" part-timers who want full-time work and "discouraged" people who have stopped looking make up 16.2 percent of working-age Americans.

The Labor Department compiles the figure to assess how many people want but can't find full-time work -- a number the unemployment rate alone doesn't capture.

In a healthy economy, the broader measure of unemployment stays below 10 percent. Since the recession officially ended more than two years ago, the rate has been 15 percent or more.

The proportion of the workforce made up of frustrated part-timers has risen faster than unemployment has since the recession began in December 2007.

That's because many companies slashed workers' hours after the recession hit. If they restored all those lost hours to their existing staff, they'd add enough hours to equal about 950,000 full-time jobs, according to calculations by Heidi Shierholz, an economist at the Economic Policy Institute.

That's without having to hire a single employee.

No one expects every company to delay hiring until every part-timer is working full time. But economists expect job growth to stay weak for two or three years in part because of how many part-timers want to work full time.

And because employers are still reluctant to increase hours for part-timers, "hiring is really a long way off," said Christine Riordan, a policy analyst at the National Employment Law Project. In August, employees of private companies worked fewer hours than in July.

Some groups are disproportionately represented among the broader category of unemployment that includes underemployed and discouraged workers. More than 26 percent of African-Americans, for example, and nearly 22 percent of Hispanics are in that category. The figure for Anglos is less than 15 percent. Women are more likely than men to be in the group.

Among the Americans frustrated with part-time work is Ryan McGrath, 26. In October, he returned from managing a hotel project in Uruguay. He's been unable to find full-time work, so he's been freelancing as a website designer for small businesses in the Chicago area.

Some weeks he's busy and making money. Other times he struggles. He's living at home, and sometimes he has to borrow $50 from his father to pay bills. He's applied for "a million jobs."