On the edge, looking in

Phil Davies | Editor, fedgazette

Published November 28, 2016

The federal government uses several yardsticks to gauge slack in the labor supply—the share of the adult population that isn’t fully engaged in the workforce. The best known is the unemployment rate, but alternative measures track the underemployed and those who aren’t working, but not technically unemployed.

Data on labor underutilization come from the Current Population Survey, a monthly survey of households conducted by the U.S. Census Bureau for the Bureau of Labor Statistics. The CPS estimates the number of people who desire full-time work but have had to settle for a part-time schedule. It also tracks the “marginally attached”—those who say that they are available for work and have looked for a job sometime in the previous year. The marginally attached are not counted as unemployed—and therefore are not in the workforce—because they haven’t searched for work in the previous four weeks.

The marginally attached include discouraged job seekers, those who have given up looking for employment because they believe there are no jobs available or that they lack the necessary qualifications.

The number of underemployed workers and people with only a tenuous connection to the workforce is cyclical, moving together with the unemployment rate over time (see chart). The ranks of involuntary part-time workers and the marginally attached in the district swelled during the Great Recession as many laid-off workers resorted to patchwork employment or searched for work only intermittently. Today far fewer people live on the margins of the workforce, but in district states between 2 percent and 5 percent of those who are either working or available for work are underemployed or outside the workforce, looking in.

on foot in one foot out

The latest available CPS data, covering the four quarters ending in July, show that involuntary part-time workers and the marginally attached, combined, slightly outnumbered the unemployed in the district.

In addition, an unknown but likely sizable number of district residents report in the CPS that they want a job, although they may not be currently available for work. Nationwide, according to BLS estimates, there were 2.2 million such aspiring but detached workers in September—more than twice the number who were marginally attached.