The Unemployment Numbers are a Sham

Dec 27, 2013

The new December unemployment numbers will come out tomorrow. I've been saying for a long time these numbers are simply wrong. Here is a piece I originally wrote back in September for PBS Newshour's Making $ense blog. The argument is still the same.

When the unemployment numbers are released the first Friday of each month, they drive headlines. Retailers cross their fingers. The business world looks for signs that interest rates may rise again.

The problem is that the unemployment numbers are wrong. They just aren't keeping up with the changes we're seeing in the new workforce. The Bureau of Labor Statistics' employment surveys were designed (back in the 1940s) to keep track of who has a full-time job, who doesn't, and who's looking.

But the way we work has changed dramatically since then. People are abandoning the 40-hour workweek -- some by choice, some by circumstance -- and becoming freelancers, working gig to gig, project to project. At last count, in 2006, more than 42 million people were considered independent workers. That's nearly one-third of the workforce.

The BLS surveys haven't kept up. They don't capture this type of independent, variable employment because they're not asking the right questions. The baseline question in the household survey is, "Last week, did you do any work for either pay or profit?"

Imagine Caroline, a freelance web designer who just finished a project a week ago and has a gig with a new client starting in a few days. Last week, she did not "work for pay or profit," but she wasn't exactly unemployed, either; she had a job lined up. What would the BLS make of her?

The BLS still uses a standard workweek as the measure of employment, but there's a whole workforce out there that doesn't fit easily into that box. For many freelancers, full-time employment is really a series of short-term (or part-time) gigs and projects.

Imagine Marcus, an independent anesthesiologist who works 20 hours a week for a doctors' group, teaches as an adjunct professor at a local medical school and is a serious amateur photographer, selling photos on Etsy.

His BLS interview would go off the rails at the question, "What is the main reason you do not want to work full-time?" Marcus has crafted the flexible work-life he wants, but the BLS assumes that he (and all Americans) should want to work one, full-time job.

Traditional work is being replaced by fractional work and micro-gigs, and the BLS isn't capturing this massive economic movement. It's impossible to know how many people are being miscounted, undercounted or left out entirely. With freelancing on the rise, we can't just leave this new workforce out of our economic data. The BLS surveys need to be updated to reflect the way people work now.

The issue isn't really about whether the official unemployment number would go up or down, but about rethinking what it means to be "employed" to address whether your income provides a sustainable life. The unemployment numbers currently tell us whether a person is or is not going to a job, but they don't tell us much about the quality of that job -- from an economic or social viewpoint -- which is important information to have to understand the economy and the labor force.

Instead of focusing on whether someone's job is full-time or part-time, how about asking if they have enough work to sustain a life?

We do have an employment problem in this country, but we're not going to figure out what it is until we start asking the right questions.

Sara Horowitz

As the founder of Freelancers Union, Sara has been a voice for freelancers for over two decades.