By Ronald R. Pollina
Sigmund Freud said, “Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead.” Many Americans and most political leaders at the federal and state levels want to believe in our “official unemployment rate.” The official rate gives no pleasure, but it is less painful than the actual rate.
Unemployment is the most significant obstacle in the way of our nation’s economic viability. It is a difficult problem, and many politicians simply don’t understand its cause or avoid tackling it for fear of failing. The best solutions are not popular with lobbyists, unions or corporations, and to implement them would cost politicians the financial support they desperately need to get reelected.
According to the U.S. Department of Labor’s official unemployment rate for May, 9.1% of the nation’s labor force, or approximately 13.9 million people, are unemployed. To get a sense of the magnitude of that number, add together the entire populations of the nation’s two largest cities, New York and Los Angeles, and you will still be short by over 1.7 million people, or roughly the populations of Philadelphia and Orlando.
Equally significant is a fact that most politicians do not acknowledge, realize, or even discuss the fact that the official unemployment rate doesn’t include Americans who have dropped out of the market or those who are underemployed. Though the math may be fuzzy, the method is like a magical act. Hocus-pocus—a wave of a wand—and millions of unemployed and underemployed workers vanish.
Magicians have made elephants, horses, and tigers disappear, and David Copperfield even made a national icon and symbol of freedom, the Statue of Liberty, vanish. But those illusionists are amateurs compared with the federal government, which can make millions of Americans vanish. The official unemployment rate would be considerably higher if it were still calculated as it was before the Clinton administration, when “discouraged workers” were included.
Discouraged workers are those who are not currently looking for a job because they feel their search would be in vain. Many of them are members of minority groups or are 50 or older. “Marginally attached” workers are also excluded in the official unemployment rate. They are people who want and are available for jobs and recently searched for work but aren’t currently looking because of problems with things like child care or transportation costs. With gas prices rising and wages dropping, this category can be expected to grow. Also excluded are part-time workers who seek full-time work.
The Labor Department’s most comprehensive unemployment rate (U-6), which includes the above categories, is 15.9%, or approximately 24 million people. That is 10.6 million more Americans than are counted by the official unemployment rate.
Again, to gain perspective, 24 million people is equivalent to the entire population of the nation’s nine largest cities—New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Diego, San Antonio, and Dallas. During the height of the Great Depression in 1933, 12.8 million people were unemployed, or about 24.7% of the nation’s labor force.
If we are to adjust the direction in which the nation is moving, we must first take an honest look at where we are, starting with a truthful assessment of unemployment. Our political leaders must stop their ceaseless and shameless fundraising and pandering to special interests and address issues that will build the future for all Americans. We need a tax system that works for all Americans, along with a trade policy that allows us to be a strong global competitor in a manner that will not sacrifice our jobs.
Freud may be correct about illusions. In this case, however, the reality is that without jobs America will not be able to maintain a reasonable standard of living or generate the taxes to secure our national security.
If hocus-pocus is the order of the day, the American dream may become an illusion.