While the total number of unemployed persons increased by 45,000 in July to 12.8 million, that figure masks the true causes of unemployment, which can range from retirement to temporary layoffs to being fired.
This is because the government calculates unemployment by asking people if they have jobs and, if not, if they have looked for work in the past month. If they don’t have jobs but have looked for work, the government classifies them as unemployed – and only then does it ask why they are unemployed.
Those who say they were fired are designated as permanent job losers by the Bureau of Labor Statistics. While this figure has declined since its recession-era peak of 6.8 million in November 2009, it remains well above the pre-recession level of around 1.6 million.
What this means is that slightly more than one-third of the unemployed – the 4.4 million -- are unemployed because they have permanently lost their jobs, not due to other factors such as retirement or temporary layoffs.
Adding in those who had completed temporary work and the numbers of those who are permanently out of work rises to 5.7 million.
In fact, 7.1 million total people were reported as “job losers” by the BLS in July, meaning that they were unemployed because they had lost their job for one reason or another. Only 848,000 people reported being unemployed because they had quit their jobs.
All told, a majority of people – 56.1 percent – are unemployed because they have lost their jobs, not because they have recently quit or entered the labor force. New entrants – college or high school graduates – who cannot find jobs are also classified as unemployed. This group accounts for 10.3 percent of the 12.8 million unemployed Americans in July.
A third group is those who have re-entered the labor force after dropping out. BLS considers people who haven’t looked for work in a month to have dropped out of the labor force. Once they resume looking for work, BLS counts them as unemployed. These formerly discouraged people account for 26.6 percent of the unemployed.
All told, 93 percent of the unemployed did not have jobs because the economy was too weak to create work for them, resulting in their having been laid off, unsuccessfully looking for work, or graduating with no prospects.