Look deeper into the jobless figures — the bad news is lurking there

As you may know from painful personal experience, the "official" government unemployment report is only a partial window into joblessness in America.

It doesn't count discouraged workers — those who say they want to work but aren't currently looking. It doesn't count involuntary part-time workers — people who want full-time employment but have had to settle for less. Add it up and the real U.S. unemployment rate in May was 16.4 percent — 25 million Americans — rather than the official 9.4 percent, according to the federal Bureau of Labor Statistics.

Although still not as bad as the estimated 25 percent or more of the workforce idled during the worst of the Great Depression, these data give a new perspective when comparing today's official jobless rate to similar highs in the 1970s and in 1981. In those days, the use of part-timers was much less common and temporary layoffs more likely, making today's real unemployment number remarkable by comparison.

The breadth, speed and severity of today's labor-market troubles present a daunting hurdle for the economy.

Not only is the pain far-reaching now, but it also may take years for many to recover their old earning power. Some may never, with consequences for both their ability to save for retirement and to reach high levels of Social Security contributions. This also has consequences for the 70 percent of the economy made up of consumer spending.

Call it a crisis within a crisis.

Washington state's numbers are less precise. The state counted 7,100 discouraged workers in the first quarter, raising total unemployment to about 328,800. Underemployment isn't tracked but given the Puget Sound tech cluster's dependency on part-time and contract workers, the number may be significant. Seattle's livability and attractions draw talented people who will try to hang on until full-time work emerges.

Long-term unemployment is growing, adding to the ranks of discouraged workers. The national economy must add 127,000 jobs monthly just to keep up with population growth. Instead, it has been shedding hundreds of thousands each month. While the rate of job losses moderated last month, the downward trend is expected by many economists to persist into 2010.

In Washington, April job vacancies were 35 percent fewer than six months earlier.

Meanwhile, according to economist Yoonsoo Lee at the Federal Reserve Bank of Cleveland, who studies labor economics, the number of involuntary part-timers nationally reached 9 million in April, more than double where it stood a year before and a record high.

Eventual recovery brings a good news/bad news scenario. With a historic number of people working part time, employers would likely tap into this existing workforce as their business resumes growth. The bad news, say economists at the San Francisco Fed, is that it makes it less likely these companies will hire new employees from the outside.

In addition, globalization and structural changes in the economy have slowed down the pace of hiring after recent recessions, leaving us with prolonged "jobless recoveries." And these came after the relatively mild downturns of 1991 and 2001.

During the mid- to late-1990s, the economy eventually gained traction and created a historic number of jobs, and wages were rising. After the 2001 recession, job creation was painfully slow and wages stagnated or fell back for most Americans — a well-being factor cloaked by rising house values and the debt binge.

This time, the labor market will have more job seekers than ever in a nation made poorer because of the bursting housing and stock bubbles, and facing a historic debt load. It will be a tough recovery.

You may reach Jon Talton at jtalton@seattletimes.com