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Is the Official Unemployment Rate Really Accurate?

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One of the prime target groups of the Lifeline Assistance free government cell phone program is America’s unemployed. In an era when a lot of people question whether we really need Lifeline Assistance, it can pay off to take some time to actually look at the statistics. As of April 2014, the official unemployment rate reported by the Labor Department is 6.3%, representing millions of Americans. Being as the unemployment rate in 2009 peaked at 10%, this would seem like a hopeful sign of economic recovery. But is the unemployment rate really accurate, or are things worse than they appear?

During the 2012 re-election campaign for President Obama, some far-right conspiracy theorists indicated that the unemployment rates were being deliberated suppressed to try and bolster the president’s reelection campaign (roughly the same cross-section of people who refer to Lifeline Assistance as “Obama phone”). Ignoring conspiracy theories entirely, it still seems entirely likely that the unemployment rate is actually much higher than the reported rate.

In an academic paper The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up?, authors Krueger, Mas and Niu describe how growing problems with non-response may be decreasing the accuracy of the unemployment rate. Nor is this a trend that has just started; according to the paper, it may have been going on for a couple of decades now.

There are a number of reasons why Americans are ignoring unemployment surveys or even representing themselves improperly. Firstly, overall trust in the government is not exactly at an all-time high. Secondly, the official definition of unemployment is rather specific. The government defines unemployed as, “people who are jobless, actively seeking work, and available to take a job.” People who do not fall within that definition are simply considered “out of the labor force.”

Think how many exceptions there could be to that rule that still count in a broad way as “unemployed.” Consider for example somebody who is actually self-employed, and is struggling with demand problems in their marketplace. That person cannot qualify for unemployment insurance, whether or not they are actively seeking a “job” for somebody else. They may not be actively working, but they may be trying very hard to pull things together again. These people are not included in the statistics.

Also imagine someone who has been unemployed for a very long time, and may have applied to hundreds of jobs to no avail. At this point, sensing resignation, they might give up entirely, being as they are already falling between the cracks. They might move back in with family or friends, relying on charity to survive. Or they might do something else, like work on starting their own business. People in any of these situations would not respond as “unemployed” in the surveys. Or what about someone who does want a job, but is struggling to find any they can apply for because they are disabled and need something highly specific?

On top of this, there are issues that go beyond unemployment, like low wages. Are more Americans finding jobs? Yes, but are they jobs that pay them what they need to survive? No. The majority of these new jobs are minimum wage, and the minimum wage is less than the living wage in most locations across the country. Poverty goes far beyond unemployment, and even above the poverty rate it can be very hard to make ends meet.

These problems draw attention to the real economic weakness that continues to permeate the country, despite improving statistics. Statistics don’t tell the whole story, and programs like Lifeline Assistance which connect the unemployed—all the unemployed, not just those who respond to the survey—to key resources are more important than ever.

There is a reason that Lifeline Assistance eligibility isn’t contingent on just one factor, like filing for unemployment insurance. Even Americans who are not “unemployed” can get Lifeline Assistance if they are participating in another more inclusive government aid program, or if they are living at or below 135% of the poverty threshold. Life for the unemployed is hard—it is even harder for people who cannot qualify as “unemployed” but who are without work or a steady stream of income. And for minimum wage workers, life is an ongoing battle, even with a full time job. Those people need help too, and Lifeline is there for them.

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