The unemployment rate, some economists argue, drastically understates weakness in the labor market.
Workers are not counted in the unemployment rate if they are not actively seeking work. That means Americans who are not working or looking for work because of the weak job market are "missing workers," according to the 4.
Although the official unemployment rate is now 6.1 percent, if those workers were counted the unemployment would be 9.6 percent, the EPI reports. As of August, there were 5.91 million missing workers. Perhaps most alarming, approximately half of the missing workers are in the prime working age, between 25 and 54.
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In addition, despite falling unemployment, the number of missing workers has increased since last October when the EPI began reporting missing working numbers. When it introduced the metric last year, it said there were just under 5 million missing workers and the unemployment rate would have been 10.1 percent instead of 7.3 percent at the time.
"Determining the real number of missing workers has enormous policy implications, as policymakers base their policy recommendations on their assessment of the strength of the job market," says EPI Economist Heidi Shierholz. "If they underestimate the number of missing workers, they will overstate the strength of the labor market, and be less likely to provide the economy with the support it needs."
Since the Great Recession officially ended in June 2004, the unemployment rate has gradually fallen from its peak of 10 percent in the fall of 2009. Unfortunately, most of that improvement was for the wrong reasons, the EPI states, noting that potential workers are neither working nor looking for work because job opportunities are so scarce.
"I'd like to think that the state we're in is not permanent," EPI Director of Health Policy Research
Elise Gould tells the International Business Times. "There are a lot of people out there who want to work and are not finding jobs. That is why it's important to look at an age group where you wouldn't expect demographics to affect employment."
The workforce participation rate, the ratio of working adults to the overall population, plummeted in the wake of the recession. Although it's increased slightly recently, it has regained only a third of its pre-recession peak, the Times notes.
"Part of the story could very well be that the types of jobs they're interested in and the wages they want are just not being offered now," explains Tara Sinclair, economist for Indeed.com and economics professor at George Washington University.
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