Jobless statistics overlook many

Yvonne Holt is out of work, owes $40,000 on her student loans and badly needs a paycheck. But she's not unemployed, at least not according to the government.

The 35-year-old Merced resident says she is ready to work. A college English major who also studied fine arts, she thinks she would make a good magazine editor or Internet graphic designer. Holt started looking for work a few months after the birth of her daughter, Kestrel, in 2001. But, after repeated rejections, she has become so discouraged that she hasn't applied for a job since July, when she sent her resume to a San Diego magazine.

"I've pretty much stopped looking," Holt said. "I was competing for jobs with people who had experience, whereas I was fresh out of school. My resume looked terrible."

Although Holt wants to work and regularly scans classified ads, the U.S. Labor Department doesn't categorize her as unemployed. The department counts as jobless only those people who have actively searched for work during the past four weeks.

"To be counted as unemployed, you must have taken steps that could have led to a job, such as knocking on a door, asking somebody for a job, sending out resumes or making phone calls," said Tom Hale, an economist with the Labor Department's Bureau of Labor Statistics.

"You must have actively sought a job. A passive search, such as flipping through newspaper classified ads or surfing Internet job sites isn't enough," Hale said.

And that, according to some economists, highlights an important problem with official unemployment data.

The critics say that there are more than a million people who, like Holt, want jobs but aren't considered unemployed. In addition, there are millions of underemployed people, including those who want full-time work but are forced to take part-time jobs.

For these reasons, they argue, the most widely watched of all economic statistics -- the monthly unemployment rate -- systematically underestimates the true extent of the crisis in the job market as the nation's economy sputters and misfires.

"The unemployment rate paints too rosy a picture of labor market conditions now," said Jared Bernstein, an economist with the Economic Policy Institute, a liberal Washington research group. "It leaves out significant groups of people who are unemployed or underemployed."

The Labor Department calculates that the nation's unemployment rate was 5.7 percent in October, down slightly from the recent peak of 6 percent in April. California's rate was 6.4 percent.

The department also figures that 1.4 million people who weren't actively searching for a job -- and therefore were not counted as unemployed -- wanted jobs and were available for work last month.

If such people were included among the unemployed, the department calculates that the nation's jobless rate in October would have been 6.3 percent, and even higher if the figure had been seasonally adjusted as the official unemployment rates were. The rate rises to 9 percent if those people who are involuntarily working part time are included.

SKEPTICISM IN BAY AREA

In the Bay Area, where the job market flipped from superhot to ice cold in the space of two years, you don't have to look hard to find people who scoff at official unemployment statistics.

The idea that unemployment is much higher than statistics show resonates widely. Even the San Jose area's 7.9 percent rate -- the highest of any major metropolitan area in the nation -- draws derision.

"We have a 50 percent office vacancy rate in Palo Alto, and that cannot possibly mean the unemployment rate is just 8 percent," said Andreas Ramos, a Palo Alto technical writer who recently lost his contract job.

At the heart of the matter is the question of how to treat those people who say they want to work, but have stopped pounding the pavement.