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Ed Lotterman: No, 93 million people are not unemployed

There are many unemployed people in our country, but not 93 million.

Having worked as an economist for 35 years, I am pretty used to hearing well-intentioned but preposterous statements about the economy. So my jaw should have not dropped when I heard Mike Huckabee assert, in announcing his candidacy for president, that “93 million Americans don’t have jobs.” But I couldn’t help it.

I also thought, “Well, most people will realize that is wrong or misleading.” But then I was buttonholed at the neighborhood grocery by a well-educated person who took the number at face value. So some explanation may be useful.

Huckabee’s statement is technically correct. That many Americans do not have jobs. In fact, if you add in grade schoolers, kindergartners and tots in day care and others under age 16, there are many millions more. But this has always been true and doesn’t indicate anything bad about our economy.

Yet Huckabee’s implication, that so many millions among us are “unemployed,” is so far off base that it was hard to believe he said it. If he didn’t know better than that, where were his staffers? Or is he trying to scam someone with a falsehood?

I’m personally sure he was just making an honest mistake. The precise definitions economists use in measuring labor market conditions are arcane to many, and in my limited experience, pastors often are particularly ill-trained to understand them. The worlds of theology and philosophy operate on different assumptions about human nature and society

Moreover, the practical inability to recognize when some number is hilariously wrong is a problem for many. It is not been a strong point of U.S. education and hasn’t been since the last country schools closed decades ago.

To understand where the governor was right and where wrong, we need to start with categories labor statisticians and economists use.

The “population” of the country, currently near 320 million, is every one resident in it and U.S. citizens temporarily abroad. This is a figure most people are familiar with.

For evaluating labor conditions, however, the “civilian noninstitutional population, 16 and over,” is the most-used milestone. Starting with the entire population, one first subtracts children – all those who have not yet reached their 16th birthday. That alone separates some 65 million, most of whom do not have jobs that meet official criteria.

Then subtract everyone in the uniformed services. That leaves civilians. And then take away everyone who is “institutionalized,” in prison, hospitals and so forth. The remainder, 250 million people as of March, is the “civilian noninstitutional population” to which many other tabulations are referenced.

Now, skip forward to the number of jobs. Unfortunately, there is more than one measure of this. One, “civilian employment,” is based on a monthly survey of households. That currently is 148.3 million.

Then there is “all employees: total nonfarm,” calculated from a survey of “establishments.” That currently is just above 141 million. In addition to not including farm owners or their employees, this rubric excludes all self-employed individuals and private household workers like nannies or maids.

When Huckabee cited 93 million without jobs in his speech, my first reaction was that he had taken the “civilian noninstitutional population” and subtracted “civilian employment.” But when I checked the numbers, it was clear that would have given over 101 million, not 93. So he wasn’t basing his argument on that.

There also is a category known as the “labor force.” That includes everyone who is employed plus everyone who does not have a job but is actively trying to get one. As of March, that is at 157.9 million.

Bingo! Take the 250 million civilian, noninstitutional population and subtract 157.9 million in the labor force. The difference is 92.1 million. This must be what Huckabee has in mind. And these people indeed do not have jobs.

However, economists don’t view them as unemployed, because most don’t want jobs and none, by definition, are taking even minimal active steps to get one.

Some 6.5 million of these are over age 85. Very few of these have jobs. Yet, most Americans see that such elderly people not working is a blessing, not a failure of our economic system.

Similarly, there are nearly 14 million ages 75 through 84 and nearly 30 million between their 65th and 75th birthday. Some still have jobs, especially among those under 70. But 50 million of the 93 million jobless cited by the new candidate are in the over-65 category we have come to associate with retirement.

Similarly, there are nearly 15 million high-school-age youths between their 16th and 19th birthdays. Many of these do have jobs, but the majority still do not. Among people out of 12th grade, but still in school, the majority do work, but a significant number in this cohort voluntarily do not. At least they don’t make the efforts needed to put themselves in the category of “unemployed” rather than “out of the labor force.”

Then there are traditional stay-at-home parents, still predominantly women. There are 30 million women between 20 and 35 and another 20 million between 35 and 45. One has to burrow deeply into BLS data to get information on the proportion of these working at home, but while it is lower than it was before the 1970s, it is still a significant factor.

Finally, there are the disabled and those voluntarily retired but not yet 65.

Sum all these up, and you cover virtually all of the 93 million jobless Huckabee apparently had in mind.

There still are many unemployed, of course, though the “headline” unemployment rate, now at 5.5 percent, has returned to normal levels. Using the broader U-6 rate that includes involuntary part-time workers, “discouraged workers” and the like, the number is twice as high. The first rate includes 8.6 million people, the broader rate nearly 17 million. Their plight is a legitimate campaign issue.

The drop in the proportion of the “civilian noninstitutional population” working or seeking work also is a legitimate public issue. If this “labor force participation rate” were back to peaks hit during the Clinton administration, some 10 million people would move from the 93 million cited by Huckabee as being jobless back into the recognized labor force. Most might have jobs, but some certainly would not.

The drop in this rate has been going on for 15 years in the general population and even longer for certain subgroups. However, it certainly accelerated after the financial crisis began to unfold in late 2007. That is also the point at which the first baby boomer reached age 62.

Most of this falling participation is due to the 5 million baby boomers who pass ages 62 and 65 each year and thus retire voluntarily. This is well above the number of retirees who die. But there are many, particularly among minority youths not in school, who would like jobs even if they are not officially seeking them and who probably would have had jobs before 1980.

This problem of declining participation may well be what Huckabee had in mind. But it is very complex, probably much more so than he, his advisers and most Americans recognize.

Economist and writer Edward Lotterman writes in St. Paul, Minn. Write him at boise@edlotterman.com.

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