NCPA - National Center for Policy Analysis

States' Hidden Jobless Woes

August 3, 2012

The nation's high and stagnant unemployment rate (which is now hovering at 8.2 percent) has been the primary focus of policymakers in addressing economic problems. While the unemployment data captures the woes of many citizens, it overlooks the hidden problems that face American workers, says the Wall Street Journal.

There are several reasons why the unemployment rate doesn't tell the whole story.

  • For starters, it doesn't take into account the underemployment rate, which refers to people who want jobs with more hours but cannot get them.
  • Underemployment is nearly as serious as unemployment in that people who are underemployed often do not make enough to sustain themselves or their families.
  • Furthermore, the unemployment rate doesn't take into account those who stopped looking for a job in the past four weeks because they felt discouraged about the lack of opportunities.
  • Among the 50 states, the average unemployment rate is 8.5 percent while the underemployment rate rests much higher at 15.3 percent.

According to the Labor Department, much of this economic damage is concentrated among a small number of states.

  • Some states, like Massachusetts, have unemployment and underemployment rates that are far below the states' average (6.6 percent and 13.5 percent, respectively).
  • California, on the other hand, is in a much less friendly economic situation: it is saddled with an unemployment rate of 11.2 percent and an underemployment rate that is nearly twice as high.
  • Similarly, Nevada faces a 12.3 percent rate of unemployment and 22.1 percent underemployment.

California is particularly important because it represents one of the nation's highest unemployment rates and underemployment rates while accounting for 13 percent of the nation's gross domestic product, making it critical to the success of the country as a whole. With four cities in California filing for bankruptcy or at least discussing the possibility, these joblessness concerns are not encouraging.

However, the most recent data does contain some good news. Underemployment rates are going down, and over the long term the prospects of finding a job for those that are underemployed or discouraged are expected to improve.

Source: Neil Shah, "States' Hidden Jobless Woes," Wall Street Journal, July 30, 2012.

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