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Congressman Seeks Improvements to Unemployment Statistics

By Allen Smith  3/11/2014
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Company executives scrutinize unemployment figures like hawks, but Rep. Mike Fitzpatrick, R-Pa., thinks Bureau of Labor Statistics (BLS) data are often an inaccurate measure of the labor market. So, on March 6, 2012, he introduced H.R. 4171, which would create a commission that would go through BLS unemployment figures with a fine-toothed comb and figure out what’s working and what isn’t.

Diana Furchtgott-Roth, former chief economist at the Labor Department, backs his proposal.

“The way we measure unemployment needs to be reconsidered to include people who have left the labor force but still want to work, as well as those who are underemployed, so that the statistics can offer a better guide to policymakers,” she said.

“Each month, news outlets report the jobs numbers as the definition of success or failure of the economy—unfortunately, these numbers often misrepresent the true situation,” Fitzpatrick observed.

Furchtgott-Roth gave an example: “The decline in the unemployment rate to 6.7 percent gives the misleading impression that Americans are better off and the economy is recovering. But the rate is low because discouraged Americans are leaving the labor force. The labor-force participation rate, now 63 percent, is now at 1978 levels, before the movement of millions of women into the labor market in the 1980s.”

She discounted the suggestion that this low percentage is due to the retirement of Baby Boomers, noting that the “labor-force participation among the 55-plus group has actually risen. It is due to young people who cannot find jobs and who are not in school.”

Commission’s Role

Fitzpatrick’s bill would establish a four-member Commission to Improve Labor Statistics.

The commission would:

Examine how the BLS collects, analyzes and disseminates statistical data relating to unemployment rates.

Formulate recommendations for improving processes and methods, including creating proposals for alternative measures of labor-force participation.

Develop a new method for determining and reporting underemployment.

The commission would analyze the methods for determining if someone is looking for work and what constitutes actively looking versus passively looking and “discouraged.”

Also, in determining whether someone is underemployed, the commission would take into consideration workers who are not in jobs that match their skill set or education and those who earn less than others in similar occupations or with similar education.

The bill calls for the commission to report its recommendations within 180 days of when all original members have been appointed and to disband 60 days afterward.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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