“To be included in the official unemployment rate, you have to have actively looked for work in the prior month. 'Discouraged workers' indicate that they want a job but have stopped looking, because they don't think there's any chance of finding a job,” explained FPI’s Deputy Director and Chief Economist James Parrott in an e-mail.
FPI is an independent, nonpartisan, nonprofit research organization. It analyzed the micro-data in the Census Bureau's database to come up with some of the hidden numbers not found in official unemployment reports.
The New York State Labor Board reports have shown a decline in the unemployment rate from 9 percent in August 2009, when the rate spiked during the recession, to 8 percent in July of this year, albeit with some fluctuations along the way.
If the half million discouraged workers Parrott found in his research were taken into account, the official unemployment rate for July would inflate to 9.6 percent—even above the perceived 9-percent high during the recession.
“I think if the official unemployment rate were 1.6 percent higher that there would be a lot more pressure on Washington and Albany to do something about it,” wrote Parrott.
Gov. Andrew Cuomo has formed regional economic councils to create five-year economic plans that involve job creation on a local level. He has also recently focused on green jobs, with the state handing out incentives to homeowners and businesses that make energy-saving renovations.
FPI offered several additional suggestions for solving the unemployment problem, which the organization says is even more pressing than the state acknowledges.
According to Parrott, redistributing the tax burden more evenly could relieve the pressure on the government to lay off workers. The unemployment rate for government workers has actually risen at the same time as other industries have partially recovered since the 2009 spike.
Parrott also suggested investing more in affordable higher education and transportation infrastructure, and raising the minimum wage—which currently leaves New Yorkers with 26 percent lower purchasing power than they had in 1970.
In June, Cuomo allotted $80 million in capital funds to SUNY to develop a long-term economic plan for its campuses and the surrounding community. He also capped tuition increases at 5 percent a year, 1.7 percent lower than the average annual increase.
Earlier this month, the New York Metropolitan Transportation Council met in an effort to garner federal financial support for $34 billion in transportation infrastructure projects on shaky ground.
Parrott speculated that political motivations might lead Republican policymakers to thwart any efforts to improve the economy and the lot of the unemployed.
“Certain conservative politicians think that Obama will lose in 2012 if the economy stays stagnant,” he said. “Thus, they are determined to make sure it stays that way.”
Parrott warned that with the passage of time, discouraged workers will find it increasingly difficult to get themselves out of the slump.
“[The prevalence of discouraged workers] is destructive on many levels: individual, psychological, and social. Widespread and long-term unemployment erodes workers’ skills, discourages and prevents many from investing in new skills and advanced education, and deprives young workers from gaining a foothold in the job market,” stated Parrott in his report.
Another segment of the population often overlooked in unemployment estimations are the underemployed, said Parrot.
Since the peak of unemployment rates in 2009, the number of people who want full-time jobs but are working part-time jobs has risen from 358,100 to 418,100.
This underemployment leaves New York's “productive resource fallow” states the report.
