By Jim Edmonson
Last month the New York Times released some great information about the unemployed. In a hardly noticed brief by Phyllis Korkki, the Times examined the composition of the 37 million Americans aged 20 to 64 who do not work, according to data collected in 2004. The data revealed that those unemployed at the time were not working for the following reasons:
- Taking care of others……………………………………………………… 26%
- Chronic illness or disability……………………………………………..25
- Retired …………………………………………………………………………….14
- Going to school………………………………………………………………. 10
- Unable to find work…………………………………………………………..8
- Not interested in working………………………………………………….5
- Other…………………………………………………………………………………4
- On layoff…………………………………………………………………………… 4
- Temporary illness or injury……………………………………………….3
- Pregnancy/childbirth………………………………………………………… 2
Using this information, we can easily draw some general conclusions about how many individuals are truly available for work and when your community has reached full employment. A word of caution: these figures reflect a national snapshot, so you will need to factor local current conditions into your estimate. But it’s still a good non-scientific indicator. The first significant observation is that a large percentage of the unemployed are simply not available to work—add up the percentages of those taking care of others, suffering from chronic illness or disability, retired, going to school and not interested in working. It’s 80%. Including those individuals who are temporarily unavailable, such as those with a temporary illness or injury or those who are pregnant brings the figure up to 85%. Thus, even if your current unemployment rate is a substantial 10%, it helps to understand that only 1.5% of your workforce is truly available for full-time employment.
Apply this logic to actual unemployment counts and you can speculate about realistic workforce availability. Remember that unemployment rates didn’t always take people unavailable for employment into account—that helps explain the progressive creep of rates from 2% to as high as 6% by many demographers. I think that even without the benefit of a detailed and expensive investigation you can generally accept the fact that your community has reached full employment if your unemployment rate is 5% or below.