Several years back our government changed the criteria historically used to report unemployment rates to make unemployment numbers and the administration look better. They conveniently decided to discontinue counting the underemployed, those who are working menial part-time positions because they cannot find full-time jobs. Additionally, the administration stopped including those who really want to work, but have grown so discouraged they just stopped looking for jobs. Why? Because those people no longer qualify for unemployment benefits.
Unaccounted in the official jobless rate are millions of people who still want a full-time job, but can’t find one in today’s unhealthy economy. It is difficult enough to address problem, but doubly difficult when that problem is being masked.
Jeffry Bartash recently wrote: “That excess level of what economists call labor-market “slack”—an impersonal way of referring to people desperate for work—is what gnaws at many officials at the Federal Reserve. Some are reluctant to raise interest rates until more of these people find their way into the workforce.
Buried in the monthly report is an unemployment rate referred to as U6, which includes part-timers who want a full-time job as well as would-be workers who have grown too discouraged to look for work.”
The article further explains, “The U6 measure is sometimes referred to as the “real” unemployment rate. And it still well above prerecession levels seven years after a U.S. economic recovery began.
In June, the U6 rate fell a tick to 9.6%, and it has fallen sharply from a peak of 17.1% in late 2009. In 2000, the U6 rate fell below 7%. Some 16 million people are underemployed or unemployed as measured by the U6.
The upshot: As many as 4 million in the U.S. who want a full-time work are being shut out. In a fully healed labor market they would be putting in 40-hour shifts.
That is not all the damage, either. This group of people also constitute a surplus of labor that helps to keep wages down for all U.S. workers. Companies feel less pressure to raise pay.
Until the U6 unemployment moves closer to 8%, it’s hard to argue the U.S. labor market has fully recuperated.”
If you really believe the unemployment rate is less than 5%, you probably believe inflation has been flat since 2008. So, why do you think government purposefully understates these economic indicators?
JDSupra (04/25/16) Jeff Nowak
DOL Requires Employers to Use New FMLA Poster, Publishes Guide to Help Employers Administer FMLA. The U.S. Department of Labor has released a new guide to help employers understand and administer the Family and Medical Leave Act.
Furthermore, DOL suggests you watch for the new poster soon to be released as they have announced a mandate requiring employers prominently post the new FMLA notice.
ADP News Release (04/20/16)
A recent article from ADP, said the labor market has maintained its improvement in 2016’s first quarter according to the ADP Workforce Vitality Report. The acceleration was apparent in almost all industries, as well as in all age groups among full-time workers. “Year-[to]-year wages grew substantially for job holders in Q1 2016, rising from 4.1% in Q4 2015 to the current 4.6%,” says Ahu Yildirmaz, vice president and head of the ADP Research Institute. “This is a signal that continued employment growth is leading to a smaller pool of available talent, in turn motivating employers to increase wages to retain experienced workers.”
Bloomberg BNA reported the rate of wage growth for most U.S. workers will likely spike in the second half of the year, according to their most recent Wage Trend Indicator. Kathryn Kobe, an economist who maintains and helped develop Bloomberg BNA’s WTI database, said that she expects a 2.5% to 3% improvement in the rate of wage growth within the next six to nine months. Workers who switched from a full-time job to another full-time job experienced moderate to high growth in their hourly wages, across almost all industries. Workers who moved from a part-time job to a full-time job generally saw a decrease in hourly wage.
At our law conference last week, Dr. David Weil, administrator of the U.S. Department of Labor’s Wage and Hour Division, called for a partnership between his agency and the American Staffing Association (see DOL website).
The overture came at the end of a session moderated by ASA senior counsel Ed Lenz on Weil’s book. The book addresses the challenges faced by regulators in enforcing workplace laws in the case of work arrangements, including staffing, that involve multiple employment relationships. Weil said staffing companies and DOL share many of the same concerns when it comes to compliance with labor laws. “Working together, we can achieve common goals”. All parties agreed to make it happen.
On the issue of a level playing field, Lenz noted ASA concerns that less scrupulous staffing firms are misclassifying workers to avoid paying payroll taxes, overtime wages, and to lower Comp premiums as well as other associated costs in order to lower their rates. This places firms that take their employer obligations seriously at a major competitive disadvantage. Weil urged staffing firms that believe competitors are engaging in unlawful practices to make use of the DOL complaint process to report suspected violations.