The Bureau of Labor Statistics tells that “The official concept of unemployment includes all jobless persons who are available to take a job and have actively sought work in the past four weeks. This concept has been thoroughly reviewed and validated since the inception of the CPS in 1940.” There are several deeply embedded flaws in this approach. First, our basic unemployment number does not measure underemployment – like a college professor who was laid off and now relies of his services as an uber driver or can only find minimal parttime work at a coffee house. Second, that number also does not measure folks who want to work but simply do not know where to turn. Thus, they are deemed to have dropped out of the work force, because they have not looked for a job in a month, a very typical COVID-related reality, particularly among hospitality and restaurant workers.
The there is an alternative measurement from the BLS – which adds those who are still “marginally” attached to the workforce – but it is complex and difficult to understand metric. Sydney Ember, writing for the March 15th New York Times, provides a bigger look at the overall unemployment picture: “[The number of COVID-related labor force dropouts] economists say is one of the most striking features of the pandemic-driven economic downturn: the tide of workers who, as the government counts things, have left the labor force.
“In the year since the pandemic upended the economy, more than four million people have quit the labor force, leaving a gaping hole in the job market that cuts across age and circumstances. An exceptionally high number have been sidelined because of child care and other family responsibilities or health concerns. Others gave up looking for work because they were discouraged by the lack of opportunities. And some older workers have called it quits earlier than they had planned…
“Moreover, after the last recession, many economists said those who left the labor force were unlikely to come back, whether because of disabilities, the opioid crisis, a loss of skills or other reasons. Yet labor force participation, adjusted for demographic shifts, eventually returned to its previous level.
“But the speed with which the pandemic has driven workers from the labor force has had devastating effects that could leave lasting damage… The labor force participation rate among those 16 or older has dropped to about 61 percent from 63 percent in February 2020. Among prime age workers — those 25 to 54 — it has declined to 81 percent from 83 percent.” NYT. Small single digit numbers representing millions of individuals yet without remotely touching on genuine underemployment.
Even after the economy stabilizes, eventually, from the pandemic, the notion of underemployment in a world of job-replacing artificial intelligence will be exceptionally significant. Artificially intelligence automation is already performing surgical procedures, doing legal research and drafting pleadings and performing complex financial analysis in real time. For those saddled with staggering student debt, the contraction of jobs for those with focused college, professional school and graduate educations has to be particularly terrifying. Already challenged by the COVID assault, job security is anything but a certainty in any business structure.
Many companies took advantage during the COVID rise to pare what they perceived as an excessive work force permanently. The lost wages and salaries to those permanently let go are now picked up as corporate revenues to the companies that used artificial intelligence upgrades to cut workers. The reduction of the need to house workers in factory or office space also enhanced corporate earnings. This has been one of the greatest accelerants of income inequality, exacerbated by massive corporate tax cuts that actually funded new automation used to cut employment. Except for certain industries (e.g., public entertainment/dining venues, travel, etc.), the stock market soared as most of the workforce suffered.
During the pandemic, the closing of schools and the large-scale implementation of remote learning put particular pressures on families, especially women in the work force. “Women in their prime working years have quit the labor force at nearly twice the rate of men, according to research by Wells Fargo, partly because more women work in industries like leisure and hospitality that are less suited to social distancing and partly because women are more likely to bear the burden of child care. The share of Black women who have left the labor force is more than twice the share of white men.
“Then there are the many people who may be seeking a job but who are unavailable to take one because of health concerns, illness or caretaking obligations, putting them in what economists say is something of a gray area — between being unemployed and not in the labor force — that has become more common during the pandemic.” NYT.
The social and political ramifications of these changes suggest a bifurcation – further polarization if you will – of responses. Angry populists will continue to find blame, rail against minorities and attempt to turn back the hands of time. Those in the middle and at the bottom rungs of the economic ladder, not impressed with populist conspiracy theories, will push against policies favoring big business at their expense and demand more governmental support. And many of the rich will do what they can to exclude voters who could erode their clearly minority hold on political power.
I’m Peter Dekom, and any way you look at it, we are in for a rough ride, particularly when there are so many ways to play with statistics and avoid the truth.
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