How the fight to recognize unemployment was won
Monthly public reports on jobs and unemployment are such staples of American life that it can seem as if they’ve always been with us. But these reports are relatively new and their establishment was neither quick nor easy. In recent months, they’ve become a barometer of our economic recovery, or lack thereof. Which is why we should understand what they measure, what they miss, and how they were established.
For the first 60 years of the modern economy — roughly from 1873 to 1933 — the United States experienced six major depressions, many smaller slumps, and a lot of unemployment in between. And Americans suffered through all of this without a reliable and regular count of the unemployed.
Why not? You might think this was because of the underdeveloped state of the statistical sciences. But the biggest reason was disbelief in the idea of unemployment itself. Many economists, politicians, ministers and charity officials claimed unemployment was mostly voluntary. They believed that people without jobs just did not want to work, or could not work for personal reasons.
Fortunately, theirs was not the only opinion. Socialists, progressives, union leaders and some scholars believed that the roots of unemployment lay in systems, not individual failings. They argued that unemployment’s causes were technological and seasonal changes, the rise and fall of business activity and investment and laissez-faire government policies.
They gained momentum in the 1920s, which began with a depression and ended with another. The American economist Paul Douglas made a heroic effort to count blue-collar unemployment. Sociologists Robert and Helen Lynd took a stab at counting local unemployment in a case study of Muncie, Ind.
Two years before the 1929 crash, Sens. Robert Wagner of New York and David Walsh of Massachusetts got the Senate to pass a resolution ordering the Bureau of Labor Statistics to survey unemployment and to study methods for a regular tally.
In the Great Depression, workers demonstrated for immediate relief, and voted for politicians who promised to create jobs and unemployment insurance. The Works Progress Administration, which employed millions of Americans in thousands of occupations starting in 1935, had a special interest in tracking unemployment. It needed to know how many people to help. After a variety of counting experiments involving many government agencies (including the Civil Works Administration, the U.S. Postal Service, the Census Bureau and the WPA), the WPA carried out, in April 1940, the first official monthly survey of employment and unemployment.
That first survey, and every survey afterward, was based on a scientifically selected sample of households. People would be considered unemployed not because they said they were, but because they stated that they had not worked at a paid job in recent weeks, that they wanted a job and that they had searched for one in the weeks before the survey. If you were without a job and had not searched for one, you were not unemployed. You were out of the labor force.
Since that first report, the survey has been carried out every month. But the administration and size of the job report has evolved. In 1942, the Census Bureau took over the monthly survey. In 1948, it was named the Current Population Survey. In 1959, the Bureau of Labor Statistics took over the analysis and publication of the information. The Census Bureau still does the interviewing, trying to contact people in 60,000 households each month. The monthly survey generates thousands of important numbers, from the official national unemployment rate to the rates for Black teens, veterans and disabled people.
Over the years, Bureau of Labor Statistics methods have been challenged. In the mid-1970s recession, more critics claimed that the agency was undercounting the unemployed. Some economists began using government numbers to create their own unemployment rates, often higher than the official ones. In response, but without changing the definition of unemployment or the official rate, the BLS published a table of alternative rates that resembled those of its critics.
One such alternative unemployment rate is now called U-6. In November 2019, the official unemployment rate was 3.5 percent. U-6 added parttimers who wanted but could not find full-time work and also millions who wanted a job but had not recently searched for one. Under U-6, the amplified unemployment rate was 6.9 percent.
And that’s just one alternative. A group of activists and scholars (myself included) pushing for full employment, the National Jobs for All Coalition, used a more inclusive measure of people who want a job to find an unemployment rate of 8.8 percent (which we call “The
Full Count”) for November 2019.
A fuller count might give us a clearer picture of unemployed workers. It also may explain a major American mystery: Why wage growth for average workers has been low to non-existent in many years.
Here is that puzzle. Until the coronavirus crisis, official unemployment rates were under 5 percent almost every month since January 2016. That is four years of full employment by conventional assumptions. But real hourly wages for average workers increased a total of 3 percent in that time — less than 1 percent a year. Some attribute that lower wage gain to diminished union power or the pathetically low federal minimum wage ($7.25 per hour, and even lower in some occupations). Those factors are important.
But if employment were as full and labor markets as tight as the federal numbers suggest, real wages would be jumping up by 2 or 3 percent a year.
Recently, the Bureau of Labor Statistics confessed to omitting up to 7 million people thrown out of work by the coronavirus. (By July, the undercount issue appeared solved.) But such problems point to the progress. We should be thankful that we have generally reliable unemployment numbers and the data to construct better numbers.
Stricker is the author of “American Unemployment: Past, Present and Future,” recently published by the University of Illinois Press. He is a board member of the National Jobs for All Network and professor emeritus of history, interdisciplinary studies and labor studies at California State University, Dominguez Hills. He wrote this for Zócalo Public Square.