Why the Marginally Attached are Misunderstood

As the under-employment rate is increasingly reported—often as the "real" unemployment rate—some of the data behind the figure have become obscured. The under-employment rate—now at 17.5 percent—is made up of the unemployed, the "marginally attached," and part-time workers who want full-time jobs.

References to marginally attached workers routinely indicate that this group is made up of recent job seekers who have dropped out of the workforce because they don't believe they'll find anything. With 2.4 million marginally attached workers in the U.S. last month, the message seems to be that millions of Americans are giving up hope.

[See why productivity won't kill a jobs rebound.]

But marginally attached workers are somewhat misunderstood. For the most part, this group is made up of people who had not looked for work recently not because they had lost hope, but because they were otherwise occupied with such things as family responsibilities or attending school.

Workers who have actually given up their searches because they don't believe they'll find anything are a subset of the marginally attached, and they're labeled "discouraged." There were 808,000 discouraged workers, according to the Labor Department, making up a third of the 2.4 million, rather than the whole group. Yes, the number is still grim—there were 484,000 discouraged workers last October—but not as grim as 2.4 million.

It's worth noting something else as well here. A lot of people believe the under-employment rate offers a more accurate measure of the health of the labor market than the headline unemployment rate does. Headline rate: 10.2 percent. Under-employment rate: 17.5 percent.

But it is very rare to find an apple-to-apples comparison to the 17.5 percent. Sometimes the context is even the headline unemployment rates of healthier economic times—such as the 4.7 percent unemployment rate we saw just before the start of the recession. But, if we're comparing apples to apples, the corresponding "real" unemployment, or under-employment, rate was 8.4 percent just before the recession started. It was 11.8 percent when it first began to be measured in 1994.