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2.5 Million Uncounted Unemployed Currently Ignored in Official Unemployment Calculations

July 29, 2010

As Democrats’ “recovery summer” continues to disappoint, many long-term unemployed Americans have become so discouraged over their prospects of finding a job that they have quit searching for work altogether.  Ironically, with the way the government calculates the official unemployment rate, when that happens the unemployment rate drops — since it measures unemployment only among those currently searching for work.  That’s what happened last month.  Even though the economy actually shed jobs in June, the official unemployment rate fell from 9.7 percent to 9.5 percent because over 600,000 people dropped out of the labor force. 

But just because those uncounted unemployed are not reflected in the official unemployment rate, they are no less unemployed.  The following graph displays the unemployment rate Democrats predicted if their 2009 stimulus plan passed (just above 7%) with the official unemployment rate (9.5%) and what the unemployment rate would be if it included the current 2.5 million uncounted unemployed (almost 11%).  With new July unemployment numbers due out next Friday, August 6, 2010, the question is: How many more unemployed Americans will go uncounted due to the failure of stimulus to create jobs?

Note: The “uncounted unemployed” are defined as unemployed persons not included in official unemployment rate calculations because they are not currently in the labor force, compared with the month Democrats’ stimulus passed (February 2009).  This includes people who quit looking for jobs since stimulus passed and dropped out of the labor force, plus other working-age adults who never entered the labor force, but presumably would have, if the labor force participation rate was the same as when stimulus passed.