States are Suffering Severe "Underemployment" Issues with No End in Sight

Unemployment is 8.2%. At least that's the government's story.  What's the real one?

States' Hidden Jobless Woes tells it like it really is:

"California and Nevada are struggling with some of the nation's highest rates of workers who are looking for jobs or not putting in as many hours as they would like, new government data show.

The ranks of these individuals aren't reflected in the overall jobless rate in the U.S. Labor Department's monthly unemployment report. That report—July's figures will be released Friday—is the best gauge of the health of the labor market. But the overall jobless rate, which now stands at 8.2%, doesn't tell the whole story.

For example, the national unemployment rate doesn't take into account people who want to work but haven't looked for a job in the previous four weeks because they figured none were available.

The national unemployment rate also doesn't account for people in part-time jobs who would prefer full-time work. To get a broader view that encompasses both groups, economists at the federal Bureau of Labor Statistics track the under-employment, or U-6, rates for states and the entire country.

According to Labor Department figures released late last week, California and Nevada are struggling not just with high unemployment, but also severe under-employment. California's average unemployment rate from July 2011 through June 2012 was 11.2%, but its broader under-employment rate was far higher, at 20.3%....

When it comes to one particular type of under-employed citizen—the part-timer who wants to work full-time—California is the worst offender nationwide. . . .

Nevada, another state hit by the housing bust, is worse off than California when it comes to general under-employment. Its average unemployment rate is 12.3%, the government says, and its under-employment rate is 22.1%—a gap of 9.8 percentage points compared with California's 9.1 percentage-point gap. The U.S., as a whole, has a 6.8 percentage-point difference between its 8.5% average unemployment rate and 15.3% underemployment rate. . . .

However, the data contain a spot of good news for the nation as a whole. The declines in many states' under-employment rates are steeper than those notched when the government tracked the data a few months ago. Particularly notable are improvements for the long-term unemployed and discouraged workers.

Still, California by itself is a huge part of the U.S. economy, accounting for about 13% of gross domestic product. The bigger picture from the most recent data reflects workers seeking jobs and hours, while many companies are too skittish to hire."

My Take

8.2% unemployment is bad enough.

However, many states have twice that rate of underemployment when involuntary part-time and discouraged workers are taken into account.

Whatever number we see Friday, it's a dismal situation which won't improve materially until the government starts encouraging private sector growth by slowing and then reducing government spending.

Vilifying the job creators and acting like complete fools in Washington won't instill a lot of confidence in either job providers or job seekers.

In turn, that will make it even harder to grow the economy and create more jobs.

When will all this "save the middle class, make the undeserving millionaires and billionaires pay their fair share" silliness stop? Soon, let's hope. But don't bet on it.

It's an election year.

Thanks. Bob.