Jobs report: Scarier than you think

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The nation’s jobless rate slipped to just below 10 percent last month, and while that sounds like good news, the story behind the numbers paints a scarier scenario.

Although the jobless rate slid to 9.7 percent in May, according to the Bureau of Labor Statistics, it’s thanks to about 411,000 Census employees who temporarily hopped on to government payrolls for part-time jobs that won’t outlast the summer.

Behind the numbers
The economy added 431,000 jobs, but here’s what that number doesn’t show:
From last month From last year Since the Recession

start (Dec 2007)

Have jobs down 35,000 down 1.1 million down 6.8 million
Can’t find jobs down 287,000 up 455,000 up 7.3 million
Gave up looking down 114,000 up 291,000 up 720,000
Could only find part-time work down 343,000 down 239,000 up 4.1 million
Been out of work for over 27 weeks up 47,000 up 2.7 million up 5.4 million

“The problem is a lot worse than the official numbers are telling you,” says Andrew Sum, the director of the Center for Labor Market Studies at Northeastern University in Boston. “These numbers are scary.”

Because while there are 15 million people who are looking for jobs without much luck, there’s something even more troubling. It’s that almost half of them — 6.8 million according to the report — have been plagued with long-term joblessness lasting more than 27 weeks. As time passes, not only do out-of-work people grow dependent on expensive social programs, such as unemployment and food stamps, but their outlooks on the personal and professional fronts are bound to deteriorate.

“Generally we find that when people stay out of work for long periods,” says Sum, “they’ll just quit looking for work.”

Discouraged workers quit looking

Many already have. The number of people who threw up their hands and just decided that looking for a job wasn’t worth the trouble — they’re called discouraged workers — clocks in at 1.1 million in May, according to today’s report. The number of Americans in that group is down slightly from last month, but still up 36 percent from this time last year and up 198 percent — that’s not a typo, it nearly tripled — from the onset of the Recession in December 2007.

These people are not counted in the seemingly improved unemployment rate the government presented this morning because by the labor department’s definition, an unemployed person has bothered to look for work in the past four weeks. But it’s safe to assume that most discouraged workers could really use a paycheck.

“When that happens you end up with terrible things,” he says. “These people have to be financed. A lot will go on welfare, and many end up with mental health problems and depression. It’s a costly proposition for the rest of us.”

No choices except part-time work

In the meantime, the Census jobs helped soothe another section of the report: the number of people in this country who have had no choice but accept part-time jobs even though they really want to work full time. What’s left are some 8.8 million people who have decided that half a paycheck is better than no check at all, and most of them are blue-collar workers or those with lower-paying service jobs, such as food preparation, says Sum. Slicing their salaries by some 50 percent has alone sucked $148 billion from the economy, he estimates.

“I call it the ‘Blue Collar Depression,'” says Sum. “What we find is there’s an enormous differential depending on schooling level and occupation.”

Who has it worse?
The country’s unemployment rate was 9.7 percent in May, but it’s a ratio that’s not created equally.
These groups have it worse: These groups have it better:
Unemployment rate Unemployment rate
Teenagers 26.4% Married men 6.7%
Adults, no high school 15% Women, over age 25 7.6%
Single mothers 11.6% Part-time workers 6.7%

Education makes a difference

So yes kids, please stay in school. Educated people are more protected from harsh economic winds: The jobless rate for adults with a bachelor’s degree and higher is 4.7 percent, while high-school dropouts have a rate of 15 percent. But also because, since last month, the construction industry lost another 35,000 jobs and retail trade lost 66,000 positions. The financial industry lost fewer positions — just 12,000 jobs — while information employment didn’t budge and education and health services added 17,000 jobs.

Says Sum: “If you take away Census jobs, we’re left with nothing.”