The Full Measure of Unemployment

(Updated 6/7/13, 3:40 p.m.; clarified description of part-time workers in second figure)

Virginia’s unemployment rate has fallen considerably, to 5.2 percent in April 2013 from its peak of 8 percent in February 2010. But the full range of employment challenges Virginians face are often much more complicated than this single measure might lead you to believe.

Other job trends lurking below the surface of the unemployment rate tell a less optimistic story. Trends like how long people have been unemployed, whether workers are able to get full-time employment when they want it, and whether those without jobs have become so discouraged they’ve stopped looking for work altogether are critical, too. Ignoring these broader trends overlooks the real challenges facing Virginia’s workforce and economy.

The official unemployment rate measures only the percentage of workers who do not currently have a job but are available for and actively seeking work. That narrow focus disregards some key groups of Virginians that make up a bigger cohort of struggling workers known as the “underemployed.”

This includes people who are working part-time but would like to work full-time (“Part Time for Economic Reasons”) and unemployed people who want to work but are not currently looking for jobs, possibly because they believe there are no jobs for them or have other reasons, like difficulty affording safe, reliable child care (“Marginally Attached”).

When you factor in these Virginians, the more troubling story emerges.

Between 2007 and 2010, Virginia’s underemployment rate grew to 12.9 percent from 6.1 percent. Over that same period, the official unemployment rate increased to 7.5 percent from 3.1 percent. Despite declines in both measures since their peaks in 2010, unemployment has declined faster than underemployment.

In fact, the state’s underemployment rate (11.7 percent) was practically double the unemployment rate in 2012.

Driving the underemployment rate are those part-time workers who want to work full-time but are only able to find part-time jobs. About 1 in 5 Virginians were in this predicament in 2012, an all-time high. This bucks the national trend, which has seen a steady drop in the rate since 2010.

Another dangerous trend that escapes the official unemployment rate is the rise of the long-term unemployed. The longer people are out of work, the harder it is to get work because of discrimination against the unemployed by companies that are hiring and the erosion of job skills.

Over one in every three unemployed Virginians (36.1 percent) were out of work for more than six months in 2012. That’s more than double the rate before the recession in 2007, when it was just one in every seven unemployed Virginians (15.1 percent).

The unemployment rate has dropped. That’s good news. But unless we take a good long look below the surface, we’re missing the bigger picture.

–Sookyung Oh, Policy Analyst