Unemployment the true impact

With yesterday's report of 9.7% unemployment and an increase in the number of jobs, there have been many articles written about the economic and political impact of those figures. Most of them miss the point: Unemployment right now is still an enormous problem for a large percentage of Americans and little changes at the margins will not make much of a difference to them. We will need to see many months of strong job growth (not small job growth fueled by census hires like yesterday's numbers) before there will be any impact.

First, one needs to understand the changing meaning of the unemployment figures themselves over time. According to yesterday's release, the US labor force is 153,910,000. Of these workers, 15,005,000 are unemployed. Last month (Feb), there were 134,000 fewer unemployed. In other words, for all of the hoopla surrounding the increase in the number of jobs, there are now more people unemployed than a month ago.

Second, the number of underemployed (those unemployed, unable to find full time work or who have given up looking for work) has risen to slightly over 20% of the workforce. This comes to about 30 million people underemployed. This number too rose last month.

Third, because of the changing nature of the US workforce and labor participation, the high unemployment has a more widespread effect than in decades gone by. Fifty years ago, the majority household model was a working husband and a stay-at-home wife. That has changed until today the majority model is a two wage earner family. Indeed, Although there are close to 154 million workers in the work force, there are only 105 million households in the USA according to the last census. Since many of those households have no workers in them (elderly, retired, disabled, those on welfare, students, etc) the number of households with workers is more like 90 million. With 30 millon people underemployed, there could be up to 33% of the households with someone affected by the current high unemployment. this is a much higher percentage than would have been affected in the past for a comparable number.
If one assumes that a quarter of those underemployed live in a household with someone else who is underemployed (probably a high estimate), that would make the percentage of households with someone in them who is under employed about 30%.

In short, with so many households affected by the current joblessness, it is hard to see how the popular perception (not the media perception) of the unemployment problem will change. Rosy articles may color the view of a few, but there are too many people directly affected for there to be much of a difference. Indeed, the rosy articles may just serve to cause further deterioration in the credibility of the mainstream media.