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The Employment Situation is Worse than the Unemployment Rate Indicates

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by Calculated Risk on 9/04/2021 05:35:00 PM

The headline unemployment rate of 5.2% significantly understates the current situation.

Here is a table that shows the current number of unemployed and the unemployment rate (as of August 2021).

Then I calculated the unemployment rate by including the number of people that have left the labor force since early 2020, and the expected growth in the labor force.

Unemployment
RateUnemployed
(000s)Left
Labor
Force
(000s)Expected
Labor
Force
Growth
(000s)Adjusted
Unemployment
RateFeb-203.5%5,717003.5%Mar-204.4%7,185-1,7271005.5%Apr-2014.8%23,109-7,97020019.0%May-2013.3%20,975-6,24830016.7%Jun-2011.1%17,697-4,65140013.8%Jul-2010.2%16,308-4,36350012.8%Aug-208.4%13,542-3,63060010.8%Sep-207.8%12,535-4,37070010.7%Oct-206.9%11,049-3,7308009.4%Nov-206.7%10,728-3,9129009.4%Dec-206.7%10,736-3,8811,0009.4%Jan-216.3%10,130-4,2871,1009.4%Feb-216.2%9,972-4,2371,2009.3%Mar-216.0%9,710-3,8901,3009.0%Apr-216.1%9,812-3,4601,4008.8%May-215.8%9,316-3,5131,5008.6%Jun-215.9%9,484-3,3621,6008.7%Jul-215.4%8,702-3,1011,7008.1%Aug-215.2%8,384-2,9111,8007.9%

As the economy recovers, many of the people that left the labor force will probably return, and there will likely be more entrants into the labor force (although recent demographic data has been dismal).

It would be a mistake to just look at the headline unemployment rate to assess the current situation.

Schedule for Week of September 5, 2021

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