Like most sociopolitically significant terms, “employment” has more than one definition. In simplest terms, it means having a job. But simple answers raise new questions. Does it have to be a paying job? Because if so, prostitutes qualify, but housewives do not. Does it matter how hard you work, or who you work for? Because if not, “self-employed” people who live on inherited money and need not do anything in particular may count as having jobs, whereas slaves may not.
Some may be surprised to hear how the U.S. Department of Labor (DOL) answers the question. According to definitions provided by the DOL’s Bureau of Labor Statistics (BLS, 2010; see also Juhn & Potter, 2006), official employment reports (based on the BLS’s Current Population Survey (CPS)) are issued monthly. The official monthly calculation is based upon the situation of what I will refer to as an adult (more precisely, a person aged 16 or over) during the “survey reference week.” The survey reference week is the seven-day period, Sunday through Saturday, that includes the 12th of the month. That is, if a person is employed during that week, s/he is counted as being employed for the month.
And what counts as being employed? According to the BLS definition, an “employed person” is an adult who, during the reference week, performs as little as one hour of paid work for someone else, or in his/her own business, profession, or farm, or who works at least 15 hours as an unpaid worker in a family business, or who is temporarily absent from work (due to e.g., illness). People are excluded if their only reported activity consists of work around their own house or volunteer work. People are also excluded if they are outside the U.S., are institutionalized (in e.g., prisons, nursing homes), or are on active military duty. So a person who was slaving away in the garden and at the stove to feed the kids on his/her spouse’s minimum-wage income, or a soldier who spent 80 hours fighting and ultimately dying in Afghanistan during the reference week, would not be counted as an employed person for that month; but a 16-year-old who worked as a babysitter for one hour during the entire month is counted as employed if that hour happened to fall around the 12th.
Those examples are not intended to suggest that government statisticians are stupid. They are not. They have a lot to figure out, for this nation of over 300 million people, and they have to do it with limited resources. The examples are intended, rather, to erase any illusions that the official statistics represent God’s truth. They don’t. They provide general-purpose information that is designed to be relatively easy to calculate on a large scale, and that is useful for certain general purposes.
(Note that the BLS also has a Current Employment Statistics (CES) program, informally known as the “payroll survey,” that excludes agricultural, household, and self-employed workers. In general, any data collection effort, on this or any subject, will tend to have its advantages and disadvantages when compared to other approaches.)
How about unemployment? According to the BLS, an adult is unemployed if s/he had made specific efforts to find employment sometime during the four-week period ending with the reference week, and yet still was not employed (as defined above) during the reference week. You are not unemployed if you are at home due to temporary conditions (e.g., illness, layoff with expectation of being recalled). Those without jobs who are discouraged by continual rejection, and who therefore stop looking, are no longer considered unemployed. Instead, they (along with stay-at-home parents and others) are called “marginally attached” workers and are considered to have dropped out of the labor force altogether.
The BLS defines the nation’s “labor force” as including everyone who is either employed or unemployed, as defined above. Given the many exceptions, it becomes obvious that a lot of people will not be considered to be participating in the labor force at all. They are in the military; they are at home with the kids; they have given up jobhunting; or for some other reason they do not fall into the categories of people who are either working for pay (or calling themselves self-employed, or working at least 15 hours per week in a family business, etc.) or who are officially unemployed (i.e., still looking for a job).
In actual numbers, the labor force participation rate varies by sex. In 2008, it was 59% for women and 73% for men. In other words, more than 25% of men and 40% of women did not qualify as either employed or unemployed, by the definitions used above. Without denying the convenience that such definitions provide, it is strange that the United States has wound up with a statistical approach that leaves tens of millions of people entirely out of the employment picture.
It is quite an achievement for the government and the media to have created the impression that the unemployment rate, officially defined, should be the focus of attention by policymakers and the public alike. In addition to the rather glaring matter of the labor force participation rate, the official statistical measures entirely ignore significant qualitative issues. One might reasonably ask, for instance, whether it makes any sense to convey the message that what a person does on their job is not important; they just need to have a job. Such an emphasis would seem to encourage pushing drugs or, for that matter, pushing subprime mortgages.
There are some significant valuation issues when the official measures count someone as being employed, when the more complete story is that the person in question is supporting his/her drug habit by working a few hours per week at a company that makes land mines (to kill people) for the military (purchased with tax dollars) that will tend to malfunction in field conditions (thereby jeopardizing American soldiers). It is simply absurd to have created an employment measurement system in which such a person would be considered an “employed” participant in the “labor force,” whereas another person is considered not to be part of the labor force at all if s/he has spent years working in his/her basement or community, without pay, to develop a world-changing product or service, or has been saving lives as a Red Cross volunteer.
A more individually oriented, qualitative redirection of employment-related assessment might take particular account of “underemployment,” which can involve quantitatively (e.g., not enough hours of work, not enough pay per hour) and qualitatively (e.g., understimulating) inadequate employment. Issues of work-life balance and what some call “the right not to work” provide additional responses to the traditional impression that those who lack standard full-time jobs tend to lack respectability. These and other topics will continue to be developed in further posts within this blog’s “Employment and Unemployment” category.