Millions are still jobless, so why is unemployment so low?

May 7, 2018

MURFREESBORO, Tenn. (OSBORNE)  --   Unemployment is officially at its lowest point this century, so why are so many Tennesseans still struggling?

It turns out the government jobless numbers released each month don’t tell the whole story. The national unemployment rate is currently 3.9 percent, while Tennessee’s jobless number is 3.4 percent.

Lipscomb University Professor of Business Andy Borchers explains that the jobless number refers only to people who are actively looking for work, but can’t find it.

Dr. Borchers notes there are millions of Americans who’ve gone so long without a job they’ve stopped looking. If they're no looking they're no longer counted as unemployed.

“So people who’ve kind of been on the sidelines thinking ‘Ah, there’s really nothing for me,’ it takes a while for them to get back into the workforce. And so the participation rate has edged up, but there’s still a lot of workers that are on the sidelines.”

If you counted all those sidelines workers, plus seasonal workers, and those who have part-time jobs but really want full-time work, the federal government says the unemployment rate doubles.

Those chronically unemployed workers are also responsible for a second problem, paychecks that seem to be shrinking. Wages normally rise when unemployment is low, but instead of raising wages companies are luring those discouraged workers back into the labor force.

“They haven’t had to increase that dollar amount much to get the workers they need, as workers – again – have come off of the bench and into the labor market.”

The growth in wages is up significantly from the depths of the Great Recession, but still well below rates enjoyed in the 1990s.