A lot of people are blogging this David Leonhardt piece on measuring "true" unemployment:
Over the last few decades, there has been an enormous increase in the number of people who fall into the no man’s land of the labor market that Carroll Wright created 130 years ago. These people are not employed, but they also don’t fit the government’s definition of the unemployed — those who “do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.”
Consider this: 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.
Even prime-age women, who flooded into the work force in the 1970s and 1980s, aren’t working at quite the same rate they were when this decade began. About 27 percent of them don’t hold a job today, up from 25 percent in early 2000.
There are only two possible explanations for this bizarre combination of a falling employment rate and a falling unemployment rate. The first is that there has been a big increase in the number of people not working purely by their own choice. You can think of them as the self-unemployed. They include retirees, as well as stay-at-home parents, people caring for aging parents and others doing unpaid work.
If growth in this group were the reason for the confusing statistics, we wouldn’t need to worry. It would be perfectly fair to say that unemployment was historically low.
The second possible explanation — a jump in the number of people who aren’t working, who aren’t actively looking but who would, in fact, like to find a good job — is less comforting. It also appears to be the more accurate explanation.
This attracted the attention of Felix Salmon, who says:
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.
Actually, the BLS makes a pretty good stab at calculating this number: it lists figures for "discouraged workers" who say they want to work but are not looking for a job for economic reasons, and "marginally attached workers", who say they want to work, and have looked for work in the last 12 months, but did not seek work in the last four weeks for some personal reason. These are in the labor report right beneath the "headline" unemployment figure; it's just that journalists usually ignore them. That is a problem, but something the Bureau of Labor Statistics (BLS) cannot control.
That said, when I look at the BLS figures, I don't see the same catastrophe that David Leonhardt apparently reads in them. In 1982, according to this report from the BLS, the labor force participation rate for prime aged (24-55) males was 94%. In 2012, with the Baby Boomers retiring, it is projected to fall to . . . 91%. The participation rate for women, after rising for decades, has flattened out, but any drop is probably attributable to delayed childbearing, which swelled the tally in previous years.