Worse Than It Seems: Broader Measure of Unemployment Shows Bleak Picture


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Steven A. Camarota is the Director of Research and Karen Jensenius is a demographer at the Center for Immigration Studies.


While the current high rate of official unemployment is well known, it only includes those who have looked for work in the last four weeks. There is a broader measure of employment, referred to by the Bureau of Labor Statistics as U-6, which includes the unemployed and people who would like to work, but who have not looked for a job recently, as well as those involuntarily working part-time. This report examines the U-6 measure and finds that things are much worse than the official unemployment numbers imply. The situation is particularly bad for minorities, the young, and less-educated Americans. These are the workers who face the most competition from immigrants ─ legal and illegal. (All figures in this report are seasonally unadjusted and are from June 2009.)

Among the findings:

  • As of June 2009, the overall unemployment rate for native-born Americans is 9.7 percent, but the broader U-6 measure shows it as 16.3 percent. There are 12.7 million unemployed natives, but using the U-6 measure it is 21.7 million.

  • The unemployment rate for native-born Americans with less than a high school education is 20.8 percent. Their U-6 measure is 33.2 percent.

  • The unemployment rate for young native-born Americans (18-29) who have only a high school education is 18.5 percent. Their U-6 measure is 30.3 percent.

  • The unemployment rate for native-born blacks with less than a high school education is 27.5 percent. Their U-6 measure is 42 percent.

  • The unemployment rate for young native-born blacks (18-29) with only a high school education is 25.8 percent. Their U-6 measure is 37.4 percent.

  • The unemployment rate for native-born Hispanics with less than a high school education is 22.6 percent. Their U-6 measure is 36.5 percent.

  • The unemployment rate for young native-born Hispanics (18-29) with only a high school degree is 21.3 percent. Their U-6 measure is 32.7 percent.

  • The overall unemployment rate for immigrants (legal and illegal) is 9.7 percent, but their U-6 measure is 19.7 percent, which is significantly higher than the rate for natives.

  • The unemployment rate for immigrants with less than high school education is 12.8 percent. Their U-6 measure is 27.1 percent. The unemployment rate for young immigrants (18-29) with only a high school education is 9.6 percent. Their U-6 measure is 24.2 percent.

Discussion

The unemployment rate excludes some people who may want to work, but who are not actively looking for a job and are therefore not officially unemployed. The official unemployment figures also do not include those working part-time, but who want to work full-time. In order to get a broader or more comprehensive measure of unemployment and underemployment, the Bureau of Labor Statistics (BLS) developed the U-6 measure (the official unemployment rate is referred to as U-3). The methodology section of this report explains in detail who is included in this measure. Table 1 reports unemployment figures and the broader U-6 measure of unemployment and underemployment. This more comprehensive measure of unemployment includes those who are officially unemployed, those who are involuntarily working part-time, and those “marginally” attached to the labor market. People who are marginally attached indicate that they would like to work but are not actively looking for a job because economic conditions and their own experience indicate that it is futile. Table 2 reports the percentage and number employed, unemployment, and, unlike Table 1, reports those who are not in the labor force. People not in the labor force are not working nor have they looked for work in the last four weeks. As already indicated, some of those not in the labor force are included in the U-6 measure.

Table 1 shows that over 30 percent of natives with less than a high school education are unemployed or underemployed using the U-6 measure. This is also the case for young natives (18-29) with only a high school degree. Moreover, Table 1 shows that the situation is even worse for young and less-educated black and Hispanic natives. Among black native-born high school dropouts, the U-6 unemployment rate is 42 percent; among young (18-29) black natives with only a high school diploma, U-6 is 37.4 percent. The very high rates of unemployment and underemployment and the number of those discouraged from looking for work among less-educated Americans is a clear indication that there is no shortage of workers at the bottom end of the job market. These extremely difficult circumstances for less-educated natives are relevant to the immigration debate because they are the individuals most in competition with immigrants ─ legal and illegal.

Table 1 shows there are currently 3.1 million natives with less than a high school degree who are unemployed, underemployed, or discouraged from looking for work. There are another 3.1 million young natives (18-29) with only a high school education that fall into this U-6 category. If we include those with only a high school education who are over age 29 there are another 4.5 million native-born Americans who fall into the U-6 category. It would seem that there are a very large number of potential workers with little education.

Another way to think about the number of potential workers is to consider those not in the labor force, not just those covered by the U-6 categories. The right side of Table 2 reports the total number of individuals not in the labor force. If we include all those not in the labor force and all those who are unemployed, there are over 25.2 million adult natives (18 to 65) with a high school education or less who are currently not working.1 There are another 6.5 million native-born teenagers (16-17) unemployed or not working. Of course, a significant share of those not in the labor force do not wish to work or are unemployable for some reason. But if only one-fourth of these less-educated individuals 18 to 65 became employed, coupled with one-fifth of native-born teenagers, it would equal the entire illegal immigrant workforce, thought to be seven to eight million, though that number has probably declined since hitting a peak in 2007.

The fact that unemployment and the U-6 measure look so bad for less-educated and young workers is not proof that immigration has caused this situation. Clearly the severity of current recession is part of the problem. But unemployment, underemployment, and declining rates of labor force participation have been a problem for less-educated natives long before this recession began. What we can say from the data is that those types of workers most in competition with immigrants face the most dire labor market situation. This is consistent with the possibility that immigration has harmed their job prospects. The other conclusion that we can draw from this data is that there is no shortage of less-educated workers in the country. If the United States were to enforce immigration laws and encourage illegal immigrants to return to their home countries over time, we have an adequate supply of less-educated natives to replace these workers.

Additionally, the United States could alter its immigration policy in response to the recession. The number of natives unsatisfied with their employment status (represented by U-6) raises the question of why new foreign workers are needed. In 2008, an average of 112,000 new foreign workers were authorized each month to work in the United States. This includes new adult permanent residents (green cards) and long-term temporary visas for guest workers and others who are authorized to work. But it does not include several hundred thousand illegal immigrants who are already in the country when they change their status and are given work authorization and are therefore technically not new arrivals. However, they could be counted as new work authorizations.2

Although some foreign workers are in the high-tech sector, a very large share of temporary workers and green card holders have relatively little education. The "New Immigrant Survey," for example, indicates that one-third of adult legal immigrants (new green card holders) had not completed high school. Given the deterioration in the economies of many of the primary immigrant-sending counties, it seems likely that legal immigration to the United States will remain high, absent a change in U.S. policy.

Methodology

The data for Tables 1 and 2 come from the public-use file of the June 2009 Current Population Survey (CPS), which is collected monthly by the Census Bureau for the Bureau of Labor Statistics (BLS). The CPS includes about 131,000 respondents, 70,000 of whom are in the labor force. It does not include those in institutions like prisons or nursing homes. The CPS is the nation’s primary source for unemployment and other labor force statistics. Like all government surveys, the data are weighted to reflect the actual size and demographic makeup of the U.S. population.

The government publishes employment statistics that are both seasonally adjusted and unadjusted from the survey. The figures in this analysis are all seasonally unadjusted. Unadjusted figures are computationally simpler and easy for other researchers to replicate. In general, BLS does not provide separate estimates for the foreign-born (immigrants) and native-born, however all those in the CPS are asked if they are immigrants and we have divided the population based on this question. The Census Bureau defines the foreign-born as persons who are not U.S. citizens at birth, which includes naturalized citizens, legal immigrants who are not citizens (green card holders), temporary visitors and workers, and illegal immigrants. All figures for the total U.S. population at the top of Tables 1 and 2 match those from the BLS.

The U-6 measure divides the sum of the unemployed population, involuntary part-time workers, and marginally attached people (discouraged and other) by the civilian labor force (employed and unemployed) plus marginally attached workers. The column headings in Table 1 show this calculation. An unemployed worker is someone who does not currently hold a job, but is available to work and has looked for a job in the previous four weeks. Marginally attached workers indicate that they want and are available for a job, and they have looked for work in the past 12 months. However, they are not considered unemployed because they have not searched for a job in the previous four weeks.3 Involuntary part-time workers are those individuals who report that they are working part-time for economic reasons. They want and are available for full-time work, but must instead settle for part-time hours.4 Because the total U-6 measure includes the unemployed, those working involuntarily part-time, and those marginally attached to the labor market (discouraged), it provides the broadest possible measure of problems in the U.S. work force.


End Notes

1 This figure does not include those over age 65 who are unemployed. The left side of Table 2 shows that there are 6.2 million natives 18 and older with no more than a high school degree who are unemployed. The right side of Table 2 shows there are 19.1 million natives with no more than a high school degree (ages 18 to 65) who are not in the labor force. If we add these two numbers together we get 25.3 million. But, this number would include a smaller number of people who are over age 65 who are unemployed. If we confine the analysis to only those 18 to 65, then there are 25.2 million native-born Americans with no more than a high school degree who are not working. This is the number reported in the text.

2 See Table 10 in “Trends in Immigrant and Native Employment” from the Center for Immigration Studies which can be found at: www.cis.org/FirstQuarter2009Unemployment.

3 Marginally attached workers indicate that they looked for work in the last 12 months, but not in the prior four weeks. The marginally attached are comprised of two groups, both of which are included in U-6. One group is considered “discouraged.” (The variable in the CPS used to determine this population is pemlr). Discouraged workers provide a reason related to the market conditions for why they are not currently looking for a job. The second group of marginally attached indicate that they are conditionally interested in finding work and are referred to as “other marginally attached workers.” (The variable in the CPS used to determine this population is prdisc). These individuals provide reasons such as family responsibilities, school attendance, illness, and transportation problems for why they have not searched for work in the previous four weeks.

4 Involuntary part-time workers respond that they are working part-time (1 to 34 hours a week) for economic reasons, and it includes those who usually work full-time and those who usually work part-time. They share in common a desire to work full-time.