Productive Unemployment

Productive Unemployment

The most recent unemployment numbers from the Bureau of Labor Statistics were not encouraging. Unemployment in May 2008 was 5.5%, up from 5.0% in April 2008; 4.5% in May 2007; and 4.7% in May 2006.

A lesser known Bureau of Labor Statistics figure is even more revealing. In May, labor underutilization, also known as underemployment, was a whopping 9.7%. That means that nearly one in ten adults is unemployed (looking for work and unable to find a job); has looked for work recently with no success; is available for work but has stopped searching because of the discouraging job market; or wants to work full-time but can find only part-time work.

Even more surprising is the fact that when compared with recent history, the underemployment rate of 9.7% is high, but not unusually so. During the past ten years, the monthly underemployment rate has ranged from a low of 6.9 to a high of 10.4 percent. Clearly, periods of job transition have become an ongoing component of individual working life in the United States. Why then are these labor underutilization figures, released by the Bureau of Labor Statistics every month, not reported more regularly by the mainstream media?

U.S. economic output is obviously constrained when one in ten willing workers can’t find gainful employment. It is in everybody’s interest for the unemployed and underemployed to return to work quickly and to emerge from job transitions better equipped to work hard and prosper.

This is not a challenge that lends itself to a one-size-fits-all solution, but there are opportunities for businesses, non-profits and government policymakers to play important roles. Promising places to start include employer-designed training programs in community colleges; private-nonprofit partnerships to retrain workers for growth industries such as healthcare and alternative energy; and incentives for individuals to save for between-job transitions and for investments in life-long education.