If Unemployment is so Low, Why are so many Struggling?

The polarization between those who have wealth and those who don’t continues to widen across America. The dichotomy exists between a lower level of unemployment and those that are not sustaining themselves financially. A recent Federal Reserve survey of some 12,000 households found discouraging news. One out of every four families reached don’t believe that they are “doing okay” financially. What’s just as disheartening, is that 40 percent of these Americans could not afford to pay a $400 emergency expense if it occurred. How can this be you ask? Well, to begin with, statistics, as we know, can be misleading. The unemployment rate fell to 3.9 percent in April, the lowest level since 2000. Former Federal Reserve Board Chairwoman Janet Yellen has a reason. “Unemployed workers who give up on finding a job and quit the job hunt are not included in the Census Bureau’s definition of the unemployed,” says Yellen.  The decline can be two-fold. Part of it reflects the ongoing retirement of the Baby Boom generation and other long-running demographic factors, while part of it is attributable to workers getting discouraged by the lack of available positions and ending the job search. Just how many no one really knows.

The other side of the coin is those that are working. These are of course people not counted as unemployed, but just may be the ones the survey is speaking of. The Fed survey further states that, “Others who are also employed describe a very different experience: fewer hours than they want to work, only a few days’ notice on work schedules, and little in benefits or pay increases.” More than one in five said they weren’t able to pay the current month’s bills in full, and more than one in four said they skipped necessary medical care last year because they couldn’t afford it. Those amount to 20 and 25 percent, not the anemic 3.9 percent that the unemployment number states.

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Perhaps a statistic that meets halfway is the U.S. Underemployment rate. The rate is created by adding unemployed workers, who are looking for work, to the number of workers employed part time but seeking full-time work. This statistic has floated between roughly 12.5 percent to 14 percent as of July 2017. This number may be more representative of the figures in the Federal Reserve survey.

President Trump has weighed in on the matter, often suggesting that the unemployment number might not be totally reflective of the American worker. In mentioning those workers not reflected in the unemployment statistic, Trump remarks, “I call them the forgotten man, the forgotten woman. But a lot of those people — a good percentage of them would like to have jobs and they don’t.”

Fed Governor Lael Brainard said in a statement that the Fed expects the unemployment rate to drop to 3.6 percent by 2020, and then back toward a full employment level of 4.5 percent. This level is where the Fed believes the balance is between growth and inflation.  It’s hard to get a really accurate picture of unemployment in a constantly changing economic sea. Professor Yellen notes that the unemployment rate is still probably the single best indicator of overall economic health.

About John Thomas

John Patrick Thomas is a four-time cancer survivor who lives with his family in South Florida. John attended Gettysburg College and The American University before embarking on an entrepreneurial career on Wall Street. He turned to the teaching profession after his life-threatening bout with bone cancer. John has recently written a #1 Amazon Cancer Bestselling book entitled, “A Call to Faith, the Journey of a Cancer Survivor.” He has appeared in publications such as The New York Times, The Wall St. Journal, The Washington Post, Memorial Sloan-Kettering Cancer Center publications, and was featured in new DayStar network series, “Impact with Pastor Dave.” He has traveled as a missionary and may be one of the few people that tell you cancer was the best thing to ever happen to him. You’ll have to ask him why.

5 comments

  1. Very simple, people are not living within there means I am 65 when I was young very few had a new car, or a nice house, we worked hard, saved, never used credit, if we could not pay for something we got by without it, we would by many things used, or made it, now everyone things if they do not have a new car, a nice house, a boat, and money to blow they are poor, but it is not true, we need to get back to loving are family, not things, working and saving, not spending every dime we get, and I see people using there credit card for coffee, lunch, and stupid things like that, I see people with food stamps buying chips, candy, pop, and stakes, and many things I can not afford ! they should never be allowed to buy many things on food stamps, then they stand on the street begging for money? they should be picking fruit, veggies, mowing lawns but it is much easier to steel from tax payers smoke pot and watch cartoons, it they need help then help them but also give them some self respect make them work, or no help ! make it hard to get buy with other peoples money and make it so they have some pride to know they earned there money !

    • “Judge Faith”, a TV actual court, had a person on it today that makes $7.75 per hour. She isn’t making it. However, I picked up
      2 of the reasons. She drinks heavy & spends $150 getting her hair done. I am 82 years old. I started work 66 years ago, at minimum
      wage. I have never paid late, or missed a payment. However, I do
      not smoke or drink, & am very careful what I do. I am known to be thrifty, & I have needed to be. I have had a good life.

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