New data released this morning by the Bureau of Labor Statistics show that 13.9 percent of the workforce was unemployed at some point in 2012, much higher than the official 2012 unemployment rate of 8.1 percent. How can this be? Each month, the official unemployment rate provides the share of the labor force unemployed in that month. But this understates the number of people who are unemployed at some point over a longer period, since someone who is employed in one month may become unemployed the next, and vice versa. So the official annual unemployment rate—which is actually the average monthly unemployment rate for the year—is much lower than the share of the workforce that experienced unemployment at some point during the year.
The figure shows both the official unemployment rate and the “over-the-year” unemployment rate—the share of workers who experienced unemployment at some point during the year. Using the ratio of the over-the-year unemployment rate to the official unemployment rate in 2012, we can project the over-the-year unemployment rate for 2013 and 2014. It is likely that 12.0 percent of the workforce, or more than one out of every 9 workers, will be unemployed at some point next year. Furthermore, in the current weak recovery, the lack of job opportunities means that more than 35 percent of unemployed workers are unemployed for more than six months, so many of the estimated 12.0 percent of workers who will be unemployed next year can expect a potentially ruinous, lengthy period of unemployment.
This is no time for Congress to turn its back on the long-term unemployed. The Emergency Unemployment Compensation (EUC) program, authorized by Congress to provide support to millions of Americans who lost their job through no fault of their own during the Great Recession and its aftermath, is set to expire on December 28, 2013. And the budget deal announced last night failed to extend it. Allowing EUC to expire would cut a crucial lifeline to millions of workers and their families at a time when job opportunities remain extremely weak, and would further slow our fragile economic recovery.