1. The broad unemployment rate rose 0.4 percentage points. The unemployment rate remained at 9.6 percent in September, but the U-6 rate, a broader measure of unemployment and underemployment, jumped to 17.1 percent. That is the highest rate since April, and only 0.3 percentage points off of the 2009 high of 17.4 percent. The U-6 measure counts unemployed workers, people working part-time who want to work full-time, and discouraged workers who have given up looking for a job but still want one. And the change in the rate is due to a huge increase in workers with part-time jobs who want full-time jobs. From August to September, that number climbed from 8.73 million to 9.34 million. A year ago, it was 8.13 million.
2. Overall job losses were much higher than economists expected. The consensus guess among economists was that the economy would add a few thousand jobs in September. Instead, it shed 95,000. What happened? Essentially, economists thought the government would lose fewer jobs and that private employers would add more: They did not accurately recognize the extent of local-government job cuts, and overestimated private employers’ willingness to hire. On top of that, the Labor Department revised its August employment numbers, making the job losses more dramatic between the two months.

Heidi Shierholz, an economist with the Economic Policy Institute, gave this flash analysis of the numbers: “The net loss of jobs reported in today’s employment report captures a job market stuck in neutral. Roughly one in six workers are either unemployed or underemployed, and the labor force continues to decline. It is time for the government to do substantially more to create jobs so the backlog of unemployed workers can get back to work.”

Nonresidential fixed investment drove growth, increasing at a 17 percent annual pace, up from a 7.8 percent annual pace in the first quarter. Businesses increased their purchases of equipment and software spending by 21.9 percent. Consumer spending, which makes up about 60 percent of the economy, grew at only a 1.6 percent annual pace — worryingly slow. That is a sign that unemployment, underemployment and concern about the weak recovery are keeping consumers from opening their wallets; it is also a cause and an effect of the lagging recovery.

• The recession has, at some point, left one in three workers unemployed and more than half of workers unemployed or underemployed — with their hours cut or their status reduced to part-time, for instance.
• 95 percent of Americans believe the economy is still in a recession, though 41 percent believe it is starting to come out of the recession. Just 3 percent believe the recession is over. Whites and Republicans are more likely than other demographic groups to say the recession is still going on — though statistically, minorities and Democrats are more likely to be unemployed or underemployed.
• More than 60 percent of Americans say they have cut back their spending. And nearly a third say they will continue to spend less, even when the economy is comfortably out of the recession.
• One-third of adults say they are “not confident” they will have income, assets and housing to finance their retirement. Among workers in their 50s, nearly two-thirds say they will put off retirement because they need to keep working to stay afloat.
• A quarter of respondents say their children will have a worse standard of living than they do, up from 10 percent 10 years ago.

Gallup surmises, sensibly, that upper-income Americans are spooked by the continued economic bad times and the crisis in Europe :

With middle- and lower-income consumer spending remaining flat as underemployment remains high, it seems that a recovery in overall consumer spending will depend to a large extent on upper-income consumers. It may be that these consumers, despite having a desire to return to spending, have been spooked by recent signs of a weakening U.S. economy, combined with the oil spill in the Gulf, global financial difficulties, and possibly future tax uncertainties. As a result, upper-income Americans, like other consumers, may be returning to the new normal spending levels of 2009. If this turns out to be the case, it could easily mean a slower economy than many had hoped for as the remainder of the year unfolds.

If you count people that want, but cannot find, full-time work and those who are unemployed but no longer actively looking for jobs (what with employers still shedding jobs rather than creating new ones), underemployment is up to 16.8 percent. Part of that may well be that the Labor Department counts anyone who worked for even an hour during the Snowpocalypse as “employed,” even if they did not get paid for the forced time off.

Worse yet for the many Americans paid by the hour, the average workweek fell to 33.8 hours. Someone working that many hours at minimum wage would earn $12,743 in a year, which is above the poverty line for a single person but far below it for anyone with dependents. The poverty line for a family of two — which could be a mother with one child — is $14,570, or $510 less than a person making minimum wage would earn if she worked 40 hours a week every week for a year. Of course, the official poverty line doesn’t currently take into account the actual cost of living, health care costs or child care costs — all of which, when added into the new supplemental poverty measure, increase the number of officially impoverished people. Most people who were able to work the average number of hours at a job at minimum wage would likely need two such jobs to be able to provide the basics for themselves and their families, but there aren’t enough jobs for nearly 17 percent of Americans to get one, let alone two.

Sixty-eight percent of those working part time are not optimistic about finding a full-time job and 55 percent of those unemployed are not hopeful about their prospects.

Of course, unlike economists and statisticians at the Labor Department, they don’t need to wait for depressing weekly or monthly unemployment figures to know that the economy sucks.

Interestingly, the same study shows that Obama polls more favorably among the underemployed than among the general public: He has a 55 percent approval rating among the underemployed and 49 percent overall. Of course, other studies showed recently that the wealthy are facing hardly any unemployment and the financial industry, which received a huge boost from the administration last year, may be shifting some political donations to Republicans (although that may just be spin, depending on how the rest of the election cycle plays out this year). Perhaps, then, Obama should hope that his newly passed jobs bill isn’t successful, lest those who benefit from it turn against him as soon as they have hope again.

Capitol Hill (WDCpix)

While the steady rise of the nation’s unemployment rate has become shorthand for the recession’s impact, many economists say the grim figures — 8.9 percent in April — don’t tell the whole story of Americans’ financial distress. While the plight of the jobless tends to dominate social policy conversations and media coverage, a less-exposed but equally vulnerable population is the millions of underemployed. This diffuse, often poorly tracked cross-section of citizens who bear the individual and collective challenges living on the economic fringes often go overlooked by policy makers and elected leaders.

Illustration by: Matt Mahurin

“The number of people under economic stress is much bigger than the official unemployment rate,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities. Who are these people? The Bureau of Labor Statistics takes a stab at quantifying these people to create a more comprehensive picture of who’s not working and why not. The Bureau identifies categories of Americans it labels as “marginal,” meaning that they are unemployed and have looked for a job in the past, but not recently, and “employed part time for economic reasons,” referring to workers who would take full-time schedules if they could. Once these groups are added to the base unemployment rate, the number climbs all the way up to 15.8 percent in April, the highest number since the BLS began tracking these sub-groups in 1994.

Yet there are some who say even these numbers don’t tell the whole story. Progressive think tanks talk about “skill underemployment.” “It’s the computer engineer who lost [his] job and is now working at 7-11,” said Heidi Shierholz, an economist with the Economic Policy Institute. “They show up as employed, not as a bad labor market outcome,” she said. In reality, though, these workers, are both earning and contributing far less than their potential — one definition of underemployment. The labor bureau’s data-collection also doesn’t take into account the millions of Americans who have had their hours or wages cut in recent months.

There’s no single agency that tracks the underemployed, so researchers have to cobble together data from all corners of the economy to come up with an estimate on disenfranchised workers. According to Philip Harvey, a professor of law and economics at Rutgers School of Law, the United States is short by nearly 23 million jobs, a far greater number than the 13.7 million of officially unemployed workers.

Gertrude Goldberg, chair of the National Jobs for All Coalition, says that lowballing the number of distressed workers leads to an inadequate response. “By under-defining it you reduce the notion of a mass of people at risk in terms of tomorrow,” she said. And while they may disagree on precisely how to count underemployed Americans, nearly all agree that their growing numbers could lead to problems both in the short term as well as in the future.

“When you have productive people that can’t get the hours they need, that represents a huge contraction for the economy,” said Heidi Shierholz of the Economic Policy Institute. Lower paychecks in the case of forced part-time employment means less money going into federal, state and city tax coffers, at a time when many local governments can ill afford a shortfall.

Social Security also takes a hit, according to Shierholz. “To the extent that people paying into Social Security are paying a percentage of their income, as people are seeing their hours reduced, that reduces their weekly paychecks, so that will reduce the amount they pay into Social Security.” In reference to recent concerns about the longevity of the Social Security trust fund, she said, “it is absolutely a contributor to this.”

As bad as this sounds, the damage to individuals’ own retirement accounts is even greater. “One of the biggest factors for having larger 401(k) balances is continuous participation in a plan,” said Craig Copeland, senior research associate for the Employee Benefit Research Institute. Since 401(k) contributions grow from stock market gains, workers who are laid off even briefly miss out on the chance to invest while the stock market is low. Companies are allowed to impose a one-year waiting period on new hires’ participation in retirement plans, so the unemployed who return to the workforce face a “time out” period that could cost them dearly in the long run.

The workers classified as involuntarily part-time by the Bureau of Labor Statistics face even greater hurdles. According to EBRI research, in 2007, only18 percent of male and 26 percent of female part-time workers participate in employer-offered retirement benefit plans. The reason for this is twofold, said EBRI’s Copeland. These employees are less likely to have the extra income to invest in a retirement plan. In addition, most companies don’t even offer retirement benefits for those who work fewer than 20 hours a week.

Underemployment also means that a worker’s Social Security benefits could be reduced when he or she collects them in retirement. This combination of reductions in private and public income streams means that when these potentially millions of underemployed Americans exit the workforce, the government could be facing a crisis of underfunded retirees.

Implications for health insurance are also troubling. Elise Gould, health economist at the Economic Policy Institute, says that in 2007, the most recent year for which statistics are available, only 55 percent of part-time employees had employer-sponsored health insurance, as compared to 74 percent of their full-time counterparts. It’s likely that these numbers have dropped further since then, she added. “There’s been a downward trend in these since 2000, and I would expect these to have only gotten worse.”

This health care gap has serious consequences, according to David Dooley, chair of the department of psychology and social behavior at the University of California, Irvine. Dooley studied the mental-health effects of underemployment as compared with unemployment. Rates of depression, alcohol abuse and other markers were similar for both groups. “The general patterns is that we get the expected adverse effects of complete job loss with inadequate employment,” he said.

However, while programs such as Medicaid and COBRA exist to help the unemployed, there are no comparable health care alternatives for underemployed workers. “If people show signs of depression or increased drinking, they’re not going to have the resources for early intervention,” said Dooley. “If they’re in a downward spiral there’s not going to be anyone to slow it down.”

Despite these troubling clues, though, people like Gertrude Goldberg of the National Jobs for All Coalition say the government hasn’t been aggressive or inclusive enough in designing stimulus programs that help out the underemployed as well as the unemployed. Although the federal government has extended unemployment benefits and given states money to boost the benefits by a nominal amount, none of this helps the employee forced to work a four-day week or take a part-time job to replace lost full-time employment.

Heidi Shierholz of the Economic Policy Institute says not to count on the promised job creation benefits of the stimulus either. “By the time the stimulus package was implemented it was already behind,” she said. “It was only expected to create between three and five million jobs. By the time it got off the ground we were seven million jobs in the hole.” She and others warn that if the underemployed are allowed to slip through the cracks, economic recovery will be all the more elusive.