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- The job shortage
Unemployment and underemployment
It is impossible to capture the strength or weakness of something as complicated as the U.S. labor market with one number. Therefore, it is important to look not just at the unemployment rate, but also at a host of measures of labor market health.
The chart above shows a more comprehensive measure of labor market slack than the unemployment rate. It includes not just the officially unemployed, but also
- “involuntary part-time” workers—those who want a full-time job but have had to settle for part-time work; and
- “marginally attached” workers—workers who want a job, are available to work, but have become so discouraged that they have stopped actively seeking work and are consequently not counted as officially unemployed.
Around 27 million workers—roughly one out of every six U.S. workers—are either unemployed or underemployed. Importantly, this is a very conservative measure of the total number of underemployed because it does not include workers who have had to take a job that is below their skill or experience level.
The Great Recession has broken all records related to duration of unemployment. The chart below shows the share of the unemployed who have been jobless for more than six months. This share has been over 40% for all of 2010, far above its prior peak of 26% in the summer of 1983.
Once workers gets laid off from a job in this labor market, the odds are stacked strongly against them finding another one anytime soon.