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The Problems of Hidden Unemployment Among Workers in 2013–2014

A third set of labor market problems facing workers is that of the hidden unemployed, or members of the so-called labor force reserve (for a discussion of this concept, see Ginzberg 1978). The number of persons in the labor force reserve and the marginally attached tend to rise sharply during recessions and jobless recoveries. [1] Although they do not count toward official unemployed figures, their joblessness contributes to personal wage losses and output losses just as if they were unemployed. Their more limited work experience resulting from these periods of hidden unemployment will also have negative effects on future employability and earnings.

Hidden Unemployment Rates Among Workers

By Educational Attainment Group Hidden unemployment rates were strongly associated with the educational attainment of workers in 2013–2014 (see Fig. 7.8). The incidence of hidden unemployment was highest for workers with no high school diploma or GED, with the likelihood of being part of the hidden unemployed decreasing as the level of educational attainment increased (see Fig. 7.8). Workers who were the least educated (those with no high school diploma or GED) had a hidden unemployment rate of just under 9 %, with rates dropping to 4 % for those who had graduated from high school or completed some college but were without a degree. [2] Those workers with a bachelor's or higher degree had a 2 % or lower rate of incidence of hidden unemployment. Workers with the lowest educational attainment were four and five times more likely to suffer hidden unemployment problems than the best educated.

By Household Income Group The likelihood of being a member of the hidden unemployed in 2013–2014 also was strongly linked to the household incomes of potential workers. As with the unemployed and underemployed, the lowest income individuals in the adjusted labor force were the most likely to be members of the hidden labor force. Nearly one in every ten individuals with household incomes below $20,000 was in the ranks of the hidden unemployed (see Fig. 7.9). The probability of hidden unemployment continued to decline as household income grew, dropping to 3 % for middle-income workers and under 2 % for those with household incomes over $100,000. Workers in the lowest income groups were between five

Fig. 7.8 Hidden unemployment rates among workers (16 and over) in 2013–2014 by educational attainment, annual averages (in %)

and six times more likely to suffer a hidden unemployment problem than the nation's most affluent workers in the 2013–2014 time period.

By Separate Educational Attainment/Household Income Groups The rates of hidden unemployment among workers in 2013–2014 varied considerably across the 36 different educational attainment/household income groups. Hidden unemployment problems were most prevalent among high school dropouts in the lowest income group, who had a hidden unemployment rate just under 13 %, which dropped to 4.4 % for lower-middle income high school graduates (see Fig. 7.10). The most affluent, best educated workers had a hidden unemployment rate under 1 %. Workers with the lowest educational attainment living in the lowest income households were 15 times more likely to suffer a hidden unemployment problem than the most affluent and most highly educated workers in 2013–2014. Hidden unemployment was virtually an unknown phenomenon among the most affluent and educated.

Fig. 7.9 Hidden unemployment rates among the adjusted labor force (16 and over) by household income, 2013–2014 annual averages (in %)

Fig. 7.10 Hidden unemployment rates among workers (16 and over) by educational attainment and household income, 2013–2014, annual averages (in %)

Fig. 7.11 Numbers of underutilized workers (16 and over), all and by type of labor market problem, 2013–2014 averages (in millions)

  • [1] The members of the marginally attached and discouraged workers tend to rise during recessions and jobless recoveries. See Cohany (2009).
  • [2] High school students not reported separately also had a very high hidden rate of unemployment.Close to 22 % of these individuals in the labor force were hidden unemployed in 2013–2014.
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