If an unemployed worker lets 12 months go by without looking for a job, the BLS drops them from the labor force altogether. They are called "marginally attached" to the labor force, but are no longer officially part of the unemployment rate or the labor force. Among the marginally attached is a category the BLS calls discouraged workers. They've become so discouraged that they stopped looking for work altogether. Finally, the BLS excludes part-time workers from the unemployment rate, even if they'd prefer a full-time job and are therefore underemployed.
Some say that the real unemployment rate should include everyone who wants a full-time job but doesn't have one, including the marginally attached, discouraged workers and the part-timers. If they were counted, of course the real or true unemployment rate would be much higher. Many argue that it would be closer to the 25% unemployment level experienced during The Great Depression. A simple calculation will show this is not true.
How to Calculate the 2011 Real Unemployment RateAs of December 2011, there were 13.097 million unemployed workers, according to the BLS. There were 153.887 million in the labor force. Divide this by the 13.097 million unemployed, and you get the 2011 year-end unemployment rate of 8.5%.
Add in Discouraged WorkersThere were 945,000 discouraged workers, who had been unemployed for so long they gave up looking for work. The BLS no longer includes them in the labor force or among the unemployed. If you add them back into the unemployed and the labor force, you get 14.042 million unemployed divided by the 154.832 million in the labor force. This creates a "real" unemployment rate of 9.06%.
Add in Marginally Attached WorkersAnother group is the 2.54 million people who were marginally attached to the labor force. This means they used to work, and may work again, but are no longer looking for work, often because they've gone back to school, have retired early or are caring for children or elderly at home. They may have gotten laid off, been forced into retirement or are otherwise a casualty of the recession. The marginally attached segment includes the discouraged workers. So, if you add the rest of the marginally attached workers back into the unemployment and labor force numbers, you get 15.637 million real unemployed divided by 156.427 million labor force and a real unemployment rate of 10%.
Add in Part-Time WorkersThere were 8.098 million people who were working part-time because they couldn't get full-time work, although they'd prefer it. They are counted in the labor force, though not in the unemployed. If you counted them as unemployed, along with the marginally attached workers, you'd get 23.735 million unemployed divided by the 156.427 million labor force and an unemployment rate of 15.17%. (Source: BLS, Employment Situation Summary Table A. Household data, seasonally adjusted)
Was the Real Unemployment Rate Ever as Bad as During the Depression?Even at the height of the recession, the real unemployment rate was not near 25%. In October 2009, the official unemployment rate reached its height of 10.2%. There were 15.7 million unemployed among 153.98 million in the labor force. There were 2.4 million marginally attached to the labor force, including 808,000 discouraged workers. Added to the unemployed and labor force, and you get 18.1 million "real" unemployed and 156.375 million labor force, and an unemployment rate of 11.6%. Then add in the 9.3 million part-time workers who preferred full-time, and the total number of underemployed was 27.4 million, which created a "real" unemployment rate of 17.5%. This was very high, and may have given a better appraisal of the true state of employment in the U.S. during the recession.
Therefore, if you stretched the definition of unemployed to include discouraged, marginally attached and part-time workers, unemployment was not as bad as during the height of The Great Depression. However, unemployment wasn't at that high a level throughout the entire Depression, which lasted for ten years. Therefore, the real unemployment at the height of the Great Recession was as high as during parts of the Great Depression. (Article updated February 8,2012)