Behind the impressive data on jobs, some hidden problems
Amid all the cheering over the latest US unemployment statistics - with the civilian jobless rate falling to an 8-year low of 5.7 percent in February and 114 million people working - there are still grounds for concern, according to some labor economists and job experts. Serious unemployment in the United States directly affects an estimated 2 million or more Americans, plus many others who are their dependents or close family members. Also, millions of Americans classified as ``employed'' are underemployed, or are working at jobs that are particularly vulnerable in a recession or serious slowdown.
Finally, pockets of unemployment and poverty can still be found in many parts of the US - imposing enormous financial burdens on state and municipal governments, not to mention the shortfalls from reduced tax receipts.
So while this ``hidden unemployment'' problem goes largely unnoticed in the positive employment data, it presents a significant political and social challenge, job experts say. A stable work force is historically committed to the democratic process. An unemployed or seriously underemployed work force is more likely to be engaged in crime, illicit drugs, or other antisocial activities.
Admittedly, February's jobless figures are impressive, leading one economist - David A. Wyss of Data Resources Inc., an economic consulting firm in Lexington, Mass. - to suggest that Vice-President George Bush should ``kiss the people at the Bureau of Labor Statistics [BLS].''
As Mr. Wyss points out, Americans tend to vote their pocketbooks, and no economic indicator is scrutinized as closely as the unemployment statistics. The number of unemployed adults is now particularly low, says Wyss - ``below 5 percent for men, only slightly above 5 percent for women.''
Moreover, economists are once again starting to fret over the implications of reaching ``full employment'' in the US - something not heard of in US political circles for over a decade. Federal Reserve Board chairman Alan Greenspan told Congress earlier this month that if the unemployment rate were to fall to 5.2 percent, the US would be at full employment. Mr. Greenspan said that could happen by late 1988. The result, he says, would be an increase in inflation, as employers began competing for workers.
February's 5.7 percent unemployment rate compares with 5.8 percent in January, 5.8 percent in December, and 5.9 percent in November. February's rate was the lowest since July 1979.
``That's certainly an edging downward,'' says Harvey Hamel, a senior economist with the Division of Labor Force Statistics at the BLS. The flip side, Mr. Hamel says, is that ``some 6.9 million persons were counted as unemployed,'' down from slightly over 7 million in January.
Jobless rosters, of course, are really ``turnover'' rosters. Not all of the 6.9 million people counted as unemployed, Hamel says, were unemployed throughout the month - or are necessarily still without jobs.
``People are continually coming in and going out'' of the unemployment rolls, he notes. Usually 40 to 50 percent of those people classified as unemployed are without jobs for less than 5 weeks, he says; some 31 percent are without jobs for about 5 to 14 weeks; 12 percent are jobless for 15 to 26 weeks.
But 13 percent, about 900,000 Americans, are unemployed for six months or longer, says Hamel.
In addition to this group, Hamel adds, another 900,000 or more ``have given up the search for work.'' These so-called ``discouraged workers'' include many in minority groups, ``perhaps as much as 25 percent to 30 percent,'' he says.
Moreover, many of the continuously unemployed are minority youths. The unemployment rate among black teen-agers last year was about 35 percent.
All this adds up to 1.8 to 2 million people, including minority teen-agers, who have been out of work for at least six months, or who have quit looking for jobs.
An important factor in the US unemployment numbers, says Wyss of Data Resources, is that there are so many ``pockets of unemployment,'' such as parts of the South, particularly Texas, farm states, and inner cities. During the 1980s, except for recessionary periods, unemployment has not been uniformly spread throughout the US.
That means solutions, such as job training or referral programs, need to be tailored for individual cities, states, or regions - rather than designed for the nation as a whole.
Also, just looking at the size of the civilian work force can be misleading. Not everyone designated as ``employed'' is working full time, or is in jobs equal to their training or professional experience.
Then there is the matter of contingent workers. Richard Belous, a labor economist with the Conference Board, divides the work force into two groups, core workers and contingent workers. ``Core workers,'' he maintains, ``have some type of implicit or explicit contract with a firm'' and they report to work day in and day out. They tend to have fairly stable salary schedules and more benefits.
Contingent workers, however, have a more short-term relationship with an employer. They include part-time workers, temporary workers, subcontractors, consultants, leased workers, or life-of-contract workers - individuals who are employed only for the duration of a particular project. In many cases contingent workers earn less than core workers. And they usually have fewer benefits.
Since 1980, Mr. Belous says, the overall US work force has grown by 10 percent. But during that same period, he notes, the contingent work force shot up 20 percent - from 28.5 million people in 1980, to 34.3 million in 1986.
So 52 percent of the job growth in the economy during the 1980s, says Belous, came in the contingent work force, and the biggest growth - a 75 percent increase - was among temporary workers.
Belous says contingent workers provide ``greater flexibility to a firm.'' Their lower compensation helps reduce the costs of labor and benefits, which helps hold down inflation. Also, some contingent workers enjoy having more freedom about where, when, and how to work.
On the other hand, contingent workers can also present a social challenge, he notes. ``Essentially what we've done in the 1980s is to make the labor market more flexible, but we've kept the social welfare system more rigid.'' The flexible worker, for example, may be paid slightly less and may have fewer benefits, such as health insurance or pension rights. Thus, he says, the contingent worker is more vulnerable to economic hardship, particularly to layoffs in economic downturns.