Why You Should Ignore the Unemployment Rate If You’re Unemployed

1 Shares

If you’re unemployed, under-employed or just looking for a better employment situation, you may do well to ignore the unemployment rate. Like the official inflation rate and so many other statistics, the unemployment rates is – shall we say – highly optimized. It’s more of a misleading indicator, and of little value to the job seeker.

Why You Should Ignore the Unemployment Rate If You're Unemployed
Why You Should Ignore the Unemployment Rate If You’re Unemployed

The Official Unemployment Rate is an Optimistic Fib

The official unemployment rate for most of this year has been hovering around 4% or a little below. It?s currently at 3.7%. That’s a very good number based on the job market of the past few decades. But either it glosses over hidden weakness, or it’s an outright fabrication. We should suspect the latter, since the official rate does not count people who have given up looking for work.

It also does not count the number of people who work part-time, but want full-time work. According to the Bureau of Labor Statistics, that number was 7.2% as of June, 2019. And even that doesn?t count those who have simply given up looking for work.

Whether the number is 7.2% or higher due to the uncounted millions who have given up looking for work, it’s a lot higher than the polite 3.7% being celebrated by the government. And cheerfully trumpeted by Wall Street and the mainstream media.

None of this should come as a surprise either. The number of large employers in the US has just about crashed since 1998. There are at least 50% fewer publicly traded companies in the US than there were in the late 1990s. That goes a long way toward explaining the lack of jobs that pay both a living wage and employee benefits.

Anecdotally, I know a lot of people who are in some level of employment disarray. Either they?re:

  • Being burned out on their current jobs.
  • Facing the prospect of job elimination.
  • Promised promotions that never happen.
  • Looking for a new job that never comes.

Many seem on the edge of their current situations. There?s no statistic that counts people who are in this situation, but we can guestimate.

The Falling Labor Participation Rate

Still another important statistic affirms a weaker job market is the Labor Participation Rate.

This is the percentage of people age 16 or older, who are either employed or are actively looking for work. The rate peaked out at 67.3% early in 2000. According to the Bureau of Labor Statistics, the rate has fallen from 66.0% in January 2006, to 62.8% in July, 2016. (It?s currently holding steady at 62.9%, despite 10 years of economic expansion.)

That looks like a small percentage drop at “only” 3.1%. But in a country of over 325 million people, that translates to well over 10 million people disappearing from the workforce in a little over 13 years. On a pro-rata basis, that change is huge.

The situation for working age men is even more pronounced. The following table from the Federal Reserve Bank of St. Louis shows the labor participation rate among this group has declined from a high of more than 87% in 1950, all the way down to 69% in May of this year. As recently as 2000, it was sitting at 75%.

The speculation is that people are dropping out of the labor force either by staying in school longer, retiring earlier, or simply giving up the job search. No matter how it’s sugarcoated, the fact that all three drivers are occurring simultaneously is an indication of a very soft job market.

In case you think I’m exaggerating the unemployment problem, Newsweek did a feature on the same topic, The ‘Big Lie’ Behind the Rosy Unemployment Rate.

The Employment Situation May be Very Different in Your Field or Location

The truth is that nobody knows how many people are either under-employed or outright unemployed. But it can be even more complicated than that. Exactly what your employment situation is will also be affected by your career field and by your geographic location.

For example, if you?re a civil engineer or a dentist, the unemployment rate is less than 1%. But if you?re working in construction or related fields, the rate is hovering between 8% and 9%. This against the backdrop of a ?booming? housing market, in which new construction is in short supply.

Geography also plays a significant role. According to the latest count by the Bureau of Labor Statistics, the unemployment rate is just 1.5% in Burlington, Vermont, but 6.4% in Fresno, California.

If you?re in either a weak employment field or location, the official national unemployment rate may be completely meaningless for you.

Your Job Seeking Efforts Should be Based on Reality, Not on the Official Fabrication

If you?re finding it more difficult to find a job in the face of an ?improving job market?, the ?lowest unemployment rate in years?, or ?the best job market in years? ? or whatever other employment-related cheerleading you hear ? don?t come down too hard on yourself. None of that is helpful. Statistics are easy to believe when you?re a statistician, a politician, or someone who?s either currently well-employed or not in the job hunt.

The ?system? ? or whatever label we want to use to describe it ? has become adept at making it look like it?s your fault if you?re unemployed, under-employed or finding it difficult to move forward in your career. What?s sad is that so many people believe that narrative. If you do, it?s totally disempowering, and that serves no useful purpose.

That also doesn?t mean you just give up and resign yourself to becoming a permanent member of the disenfranchised either. What it mostly requires is a change in strategy.

Where Do We Go From Here?

In this job market, the usual recipe of acquiring a laundry list of credentials, creating a pretty-looking resume, and blasting it out to hundreds or thousands of potential employers is largely a waste of time. The real problem is that in most fields, there are more people seeking jobs than there are jobs available.

Employers are sifting through the thousands of resumes they receive each year, and culling the list down to the very slim number of candidates who represent an exact fit for the very specific positions they’re looking to fill. Increasingly, they don’t even need to fill jobs. They can be outsourced, off-shored, or performed by the latest and greatest computer applications. Downsizing, a methodology once reluctantly reserved for recessions, has become a permanent strategy.

The current and foreseeable job market requires a totally different strategy. If you’re well-employed, or just landed a career position right out of college, count yourself among the lucky. But if you lose that good job, you may find that there’s not a comparable one waiting for you on the next go round.

Strategies to Use to Ignore the Unemployment Rate

Here are strategies I recommend, in no small part because I’m using (or have used) all three.

Become a “mobile creative”. Careers are looking more like a patchwork quilt of people holding multiple contract assignments, or juggling two or more part-time jobs or a part-/full-time job and a business. This can actually work, if you embrace it! I know because I’ve been doing it for much of the past 10 years. We can loosely refer to this strategy as becoming a “mobile creative”. That’s a person who develops mobility between business sectors and ways of earning income.

You can read all about it in Mobile Creatives ? Are You Part of the Rising Class of New Entrepreneurs? It’s a strategy I use every day, and one that I highly recommend. Not the least of which because you can build it around your own unique circumstances, talents and skill sets.

Look for work in small businesses. No, you won’t usually find the big money or the cradle-to-grave benefits that most job-seekers want. But you will find an income working for small businesses. And these days, for a lot of people, that means plenty.

The advantage here is that the traffic is a lot lighter. No one is looking to work for small businesses. You may be the only job candidate a small business owner talks to for months. But score a job here, and you may develop wider job skills (small businesses are less specialized – you’ll do a little bit of everything), employer loyalty is much greater, and you can usually work out a more flexible schedule. And it blends well with being a mobile creative.

Self-Employment: The Ultimate Career Solution

These days it seems that everyone wants a job ? few want to start a business. But becoming self-employed may ultimately provide more security, opportunity and income than a job. This is especially true as technology continues to make so many job categories unnecessary or uneconomical.

And I’d also add that becoming self-employed isn’t nearly as risky as it used to be. This isn’t because self-employment is less risky than in the past, but more because the job market isn’t nearly as safe as it used to be. It’s all relative.

Ultimately some combination of these strategies may prove to be your best hope, which is exactly what becoming a mobile creative is all about.

What do you make of the unemployment rate, the job market and the best income strategies going forward?

( Photo by fee-ach )

1 Shares

10 Responses to Why You Should Ignore the Unemployment Rate If You’re Unemployed

  1. As you well know, evidenced by this article, the unemployment rate is a meaningless fictitious number made up by the government to make people believe things are better than they really are. When you don’t count millions of people in the rate because they have stopped looking for work that deflates the number. And don’t even get me started on the millions who are permanently on welfare with no intention of going to work…..

  2. Hi Kathy – I recently read an interesting article on disability, which is the 21st Century version of welfare (there’s a separate story on that one). One of the criteria now (or since the 1980s) is the applicant’s work history. The poorer your work history, the more likely you are to get onto the program. So it’s not all about the ability to work, but rather about permanently removing you from the workforce. The growth in disability is probably one of the contributing factors to the falling labor participation rate. It works for the applicants, and for the government, who can show a more attractive unemployment rate.

    I have to believe that most people know that the statistics are all bogus and the economy really isn’t good. But they choose to ignore it, and to keep going forward no matter what. In the end, there’s probably no choice. But it also means the politicians are never held accountable, and the situation never changes. As the saying goes, “The only thing necessary for the triumph of evil is for good men to do nothing.” – Edmund Burke. Sad, but true.

  3. Very interesting analysis and advice ? I think you’re absolutely right. Finding a good job is about perseverance, skill, and a good helping of luck. Sure it can get frustrating but it’s the ones who don’t give up or, as you mention, make a job for themselves that will always succeed in the end.

  4. Hi Johnathan – Yeah, I think it’s time to bring out the entrepreneurial side in all of us. If no one will hire us we need to “hire” ourselves. It’s not like the old days, when someone out of high school could get a well-paying job at a local factory. We need to be completely flexible and open to opportunities, and not just looking for traditional jobs.

  5. Just to give a perspective from the opposite side, I am finding it hard to recruit and retain good people. I can get applicants, but often they come without good references, have a poor work history, have issues with background checks, etc. Further, we struggle with current workers that have issues with low productivity and poor work quality, but can?t look to make a change as we fear we can?t find the talent we need. This current job market has been one of the most challenging that I have seen in 30 years with respect to getting the team I really need.

  6. Hi Jim – I don’t doubt what you’re saying for one minute because I’ve heard it from other employers. But at the same time, I know a lot of people looking for jobs and it seems to take months. Meanwhile, the jobs seem to be at the lower end, and even those can be tough to get. And even for people who are fully qualified with higher-level skills, getting a job has become like running the gauntlet. Unless you’re a glove fit, you don’t even get an interview.

    As I’ve written in the past, I think a lot of the problem is the job boards. While they do work at some level, they’re creating a wall between qualified workers and employers. Since they’re algorithm driven, or more specifically the company screening processes are, good people are being screened out, and the ones who are making it through are just the ones who “check the most boxes”. But that says nothing of their abilities, motivation, or willingness.

    In addition, the job boards are causing large numbers of completely unqualified candidates to apply for jobs. So even if an employer were to investigate all 500 people who apply for a job, over 90% of them would be completely unqualified.

    The other problem is that jobs have become so specialized that there may not be a “right person” to fill the job. That’s a byproduct of technology advancing faster than humanity can adjust, as well as the rapid pace of business. It may be that the 24/7 economy has simply made it impossible for workers to keep up. And maybe in the process, they morphed into working zombies.

    I’m hearing a lot of descriptions of such workers in a lot of places. There’s a definite pattern.

    I think this also helps to explain the phenomenon of the solopreneur. Some of the most talented business people are opting to go solo, then subcontract the work out to specialists. Not all businesses lend themselves to that model, but it’s becoming increasingly possible. Since the subcontractors tend to be former employees of the best quality, the solopreneur is able to get the work done quickly, efficiently, and a high level of quality.

    I don’t have a crystal ball, but this seems to increasingly be the wave of the future. I wouldn’t even attempt to run a business with employees today. Maybe it’s a stretch, but it’s possible the traditional employer-employee construct is breaking down. Personally, I think it’s a throwback to the plantation economy, and is becoming increasingly less relevant as the economy and society evolve. There are a lot of forces acting on the economy right now, including globalization and the Internet, the impact of which is only remotely understood. These forces are pulling us in directions were not ready to go into.

  7. I think there has also been a big change in how we look to recruit new people. We use our networks. We want to hire someone that gives us better comfort that they will be able to perform as we need. It?s no different than anything else. If our neighbor recommends a good mechanic or electrician, we are likely to go in that direction versus an unknown quantity. So working that in the opposite direction, candidates should look to try and build their network as another path to finding a new job. I get weekly calls from my friends looking for referrals.

    Secondly, I am getting some positions filled by temp workers. I use temps to fill in the gaps. If they do well, I bring them on as a regular employee and often they come in at a higher level than what they would otherwise.

  8. I think you’re doing it right with the temp route (even referrals can crash and burn). A good looking resume can be a false indicator. But by bringing them in for a test run you get to see what they can really do.

    I think one of the problems today though is generational. There’s never been a generation of young people so protected as kids in the last 20 or 30 years. As they become adults they have unrealistic expectations about work. One seems to be the lack of connection between performance and income/promotions. A lot them want to get paid just to show up (akin to everyone gets a trophy). But then a lot of them have trouble even showing up. They show up late or sick out, then complain they don’t earn enough. Duh!

    I’ve written about the recent phenomenon of the disappearance of the after-school/summer job. They were common when I was a teenager and college student. Now they just go to school, and participate in activities that will help them get into college. But if you don’t work in a paying job until you’re 22 or 25 you’re probably missing a bunch of fundamentals.

    There’s so much going on these days it’s hard to identify simple causes. Which is why there are so few solutions.

  9. This has been so helpful to me, as I am now among the jobless, but not counted in the official statistics. I was initially extremely optimistic as I have never had any trouble finding a good job quickly, have good experience, resume, etc. I am now 60, and truly believe ageism is at work, along with the employment rate not being nearly as good. I am even having difficulty finding a part time position. It is hard not to start feeling panicked, so I very much appreciate what you wrote! My former employer seems to now be primarily hiring people in their twenties, with little experience; however, they are still being paid higher salaries overall! I am redoing my own daily routine and I take so many hours a day to apply for jobs, have volunteered at intervals, and take some time to just get away from it all, which I think you have to do a little of. Many of my friends are either in similar situations or recently have been, and they are all in their late 50’s and 60’s. This is a huge problem in our country, and I have not seen any politicians even bringing it up): Since the full social security age was raised for many of us, this presents another concern along with how to pay for medical until one reaches 65. Anyway, I appreciate you listening to this, and am hoping things will improve soon!

Leave a reply