At Least 27 Million Americans are ‘Underemployed’
While the official unemployment rate last year was 8.1 percent, a far greater percentage of working-age Americans were “underemployed.”
According to the Bureau of Labor Statistics, the underemployment rate in 2012 was 14.7 percent, amounting to 23.1 million people.
Underemployed Americans include those who are officially considered unemployed, plus involuntary part-time workers and “marginally attached” workers — those who have not looked for work within the last four weeks but have sought a job within the last year and are available for employment.
About 2.5 million people were marginally attached workers last year, and 8.1 million were involuntary part-time workers.
As troubling as that may be, the actual figures are likely much worse, according to a report by Wendell Cox for NewGeography.com.
For instance, Gallup estimated that the nation’s underemployment rate stood at 17.4 percent in August, meaning that there are more than 27 million underemployed workers.
Also, economists at the Center for College Affordability and Productivity have estimated that 48 percent of college graduates who are employed hold jobs that do not require a college degree. These are not included in the underemployment figures. If they were, the underemployment rate would soar.
Nevada had the highest underemployment rate during the year ending on June 30, 19 percent, followed by California with 18.3 percent. The lowest rates were in North Dakota at 6.2 percent and South Dakota, 7.8 percent.
“The productivity gap that results from underemployment constrains the U.S. economy at a time of unusually severe financial challenges,” observes Cox, visiting professor at the Conservatoire National des Arts et Metiers in Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”
“College graduates face not only a grim employment market, but have student loan repayments that require good jobs,” he adds.
“Yet things could get worse. The soon to be implemented Patient Protection and Affordable Care Act (Obamacare) has a built-in incentive for employers to shift workers to part-time status” or to hire part-time workers to avoid the mandate to provide health insurance to full-time workers.
Infrastructure Spending Won’t Produce New Jobs
President Barack Obama and prominent members of Congress have called for a significant boost in infrastructure spending on roads and bridges to create jobs and stimulate the economy.
But a new report from The Heritage Foundation asserts that those calls “misunderstand” the nature of infrastructure construction work.
“Infrastructure projects are capital intensive, not labor intensive,” James Sherk writes for the foundation.
Repair and replacement of traffic arteries require a relatively small number of highly skilled workers using advanced equipment, he points out.
Slightly more than 300,000 Americans nationwide work in highway, street, or bridge construction, and they comprise just two-tenths of a percent of all workers. So even doubling their numbers would have only a minor effect on overall employment.
The highly trained employees who work on infrastructure can require years of on-the-job training before they are fully trained. A structural ironworker, for example, needs three to four years and from 6,000 to 8,000 hours of training.
Therefore, few of the currently unemployed workers have the requisite skill and training to work on infrastructure projects. According to the Bureau of Labor Statistics, there are only 13,500 unemployed cement masons, concrete finishers, and terrazzo workers in the entire nation.
“Additional infrastructure spending would consequently employ relatively few unemployed workers,” according to Sherk, senior policy analyst in labor economics in the Center for Data Analysis at The Heritage Foundation.
“Instead, federal construction contractors would hire the skilled workforce they need away from private construction projects,” he said. “New jobs created would come primarily at the expense of other jobs in the private sector.”
He concluded that the new spending called for by Senate Budget Committee Chairwoman Patty Murray, D-Wash., and others “would do more to shuffle jobs around than reduce unemployment.”
Footnote: America’s infrastructure quality has actually improved significantly over the past two decades, and the number of structurally deficient bridges has fallen steadily since 1992.