Despite all the attention given the official unemployment figures each month, there seems to be little awareness that this number tells us only part of the story. In particular, it says nothing about the duration or severity of spells of unemployment or about how many of the unemployed are experiencing short, medium or long spells of unemployment.
The way the official rate is presented, it gives the impression the unemployed are an unchanging group of people who have been out of work for a very long time; each month a few hundred thousand more workers lose their jobs and join the millions of more or less permanently unemployed.
But the common impression fits only a relatively small fraction of the unemployed.
Actually, during most recent months, close to 4 million people became unemployed, rather than the few hundred thousand mentioned in the media announcements. Even last month, when the jobless rate declined, millions of individuals became unemployed. But total unemployment rose by only a few hundred thousand each month--or even fell --because almost as many workers left unemployment--with about half going directly into jobs. Even in deep recession, the amount of job turnover and the volume of new vacancies is great enough that most spells of unemployment are not very long. Most of the workers who became unemployed found a job well within a year.
During 1981, when the monthly unemployment rate averaged 7.6 percent, the total number of people who experienced unemployment at any time during the year was 22.1 million, or 18.4 percent of all those who worked or looked for work during the year. However, the average (median) amount of unemployment experienced by these 22.1 million unemployed was 13.3 weeks. Moreover, of those 22.1 million who experienced some unemployment during 1981, 72.1 percent had either found jobs or "voluntarily" left the labor force (for reasons other than "could not find a job") by March 1982.
The data to make these calculations for 1982, when unemployment will average about 9.8 percent, are not yet available. But we can estimate the change from 1981 based on past experience. Such estimates suggest that the average number of weeks of unemployment is likely to rise to 17 or 18, and the number of unemployed workers who will have jobs or be voluntarily outside the labor force by March is likely to fall to about 68 percent.
This could be viewed as the relatively good news about the unemployed--its dynamic side. The bad news is that there also are groups of people for whom unemployment turns into an almost permanent state. For example, among adults 25 to 60 years old, 1.3 million experienced more than 27 weeks of unemployment in 1981 and were still either unemployed or "involuntarily" out of the labor force (because they could not find a job) in March 1982. This group corresponds more closely to people in the situations the special TV programs cover so vividly. Most of them are in cities with depressed "smokestack" industries, where job vacancies at wages comparable to their old jobs are nonexistent.
In order to better gauge the severity of the unemployment situation, a statistic that summarizes the more serious spells of unemployment is needed. One way is to focus on the group of really long-term unemployed as the recession deepened. In September 1981, as the economy began to slide into the second phase of the recession that began in March 1980, 570,000 people who were actively seeking jobs had been out of work for more than 49 weeks. In addition, 220,000 people who were involuntarily separated from their previous jobs but were not looking for work said they wanted a job but had looked and believed there were none available. This group of "discouraged workers" probably contains a large fraction of workers who are undergoing very long and serious spells of unemployment, and they should be added to the 570,000 "official" long-term unemployed. Thus, our group of unemployed who were undergoing very serious spells of unemployment in September 1981 was 790,000.
This amounted to 9.3 percent of all the unemployed and 0.7 percent of the labor force. By November 1982, this long-term group numbered 1,627,000, and they were 13.6 percent of all the unemployed and 1.5 percent of the labor force.
Over this same period, the number of all unemployed workers, regardless of how long their spell of unemployment was going to last, increased by much more--3.8 million. And as of November 1982, there were 12 million total unemployed, but only 1.6 million in our long-term unemployed group.
In popular discussions, only the 3.8 million and 12 million figures are usually mentioned. But both sets of figures should be considered when trying to assess how serious the unemployment problem has become in the recession. Any spell of unemployment is unpleasant, but a spell that lasts five, 10 or 20 weeks is not as serious as the ones that last 60, 75 or 100 weeks.
If we want to devise effective measures for treating unemployment, it is important that the public and policy-makers understand the nature of the pronounced difference in the unemployment ranks. The group they should focus on currently consists of only 14 percent of all the unemployed, but it is in dire need of help. We should follow employment policies that can be "targeted" on this group. In this regard, those that make use of the unemployment insurance system would be very useful, since the system keeps detailed records on the unemployed.