Behind Today's Unemployment Number

Soon after the Labor Department released today's unemployment numbers, I spoke to Diane Swonk, the economist for Mesirow Financial in Chicago and was again reminded that economics is a social science. The numbers tell a story with human consequences.

The headline numbers suggested a labor market that has found a kind of unhappy equilibrium: The unemployment figure stayed at 9.7%, where it had been in January, and the Labor Department's payroll survey suggested that companies had shed 36,000 jobs-a number, Swonk pointed out, that's "statistically not all that different from 0." Some analysts put a positive spin on the numbers, since they were slightly better than forecast, particularly since hiring was supposed to have suffered because of heavy snow during the week of the survey. And there were no unpleasant surprises. "These days, less bad news is good news," said Swonk.

But what was behind the headline numbers disturbed her. The unemployment rate held steady because so many workers took themselves out of the ranks of job seekers, either by settling for temp work or by giving up on job hunting all together. The Labor Department's broad measure of the unemployed and underemployed-which includes those who haven't recently looked for work or who took temp work rather than sit idle-jumped up 0.3 percentage points to 16.8%. (It's called "U-6", and it's graphed below.)

"One reason the unemployment figure didn't rise was that the ranks of the discouraged jumped by 1.2 million," she said. "These are people who've just given up. They're saying 'I'm done. There's nothing in the job market for me.'"

"That's worrisome because, obviously, the longer you've been unemployed, the harder it is to get back into the work force. We know from studies in other countries that of workers who've been unemployed for a year or more, two-thirds never return to the workforce. In this country, one of four of the unemployed has been that way more than six months."

"We saw a labor market with a large discouraged workforce in the 1980s; at that time the workers were concentrated in the Midwest. Workers who've given up can be very counterproductive. In the 1980s it gave rise to the Michigan militia, who you remember were the people who trained Timothy McVeigh, the Oklahoma City bomber, still the deadliest homegrown terrorist. It's no accident that militias around the country are getting renewed strength. This is a very disturbing trend."

Chart Source: Portal Seven, Bureau of Labor Statistics

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