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The Limits of Unemployment Statistics
The Federal Reserve has a dual mandate: to promote maximum employment and low inflation. Note that it's maximum employment, not minimum unemployment: that's a very good thing, as any readers of today's column from David Leonhardt will know.
The average unemployment rate in this decade, just above 5 percent, has been lower than in any decade since the 1960s. Yet the percentage of prime-age men (those 25 to 54 years old) who are not working has been higher than in any decade since World War II. In January, almost 13 percent of prime-age men did not hold a job, up from 11 percent in 1998, 11 percent in 1988, 9 percent in 1978 and just 6 percent in 1968...
Various studies have shown that the new nonemployed are not mainly dot-com millionaires or stay-at-home dads...
Instead, these nonemployed workers tend to be those who have been left behind by the economic changes of the last generation. Their jobs have been replaced by technology or have gone overseas, and they can no longer find work that pays as well. West Virginia, a mining state, is a great example. It may have a record-low unemployment rate, but it has also had an enormous rise in the number of out-of-work men...
The unemployment rate is a less telling measure than it once was. It's simply no longer the best barometer of the country's economic health.
I'd like to see the nonemployment figures reported alongside the unemployment figures in the monthly jobs report. Neither tells the full story, but both together are richer than either one alone.
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