Business: Trying to Measure Hardship

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The national unemployment rate is one of only two economic statistics—along with the consumer price index—that regularly stir hot political debate. Last week the Government reported that in January joblessness dropped slightly, to 5.8% of the labor force, continuing a period of little change. As the economy slows later this year, however, the rate is sure to rise, and so will questioning about whether the nation is paying too high a price to curb inflation.

But what does the rate really mean? Liberals grouse that it is too low, because it does not count people who are too "discouraged" to look for jobs. Conservatives grumble that it counts as unemployed would-be working wives and others whose joblessness scarcely plunges families into poverty. Since April, a congressionally appointed commission of nine business, labor and academic experts has been studying how to improve the unemployment figures. The group's preliminary conclusions, to be issued this week, will intensify the argument.

On balance, the recommendations would make unemployment rates slightly higher than now. Main reason: the commission wants to count as unemployed any discouraged worker who has sought a job within the past six months, vs. four weeks under present policy. That change, says the commission, would raise the jobless rate by two -or three-tenths of a point.

On the other hand, the commission would consider the U.S.'s 1.4 million servicemen to be employed. They are not included in the labor force statistics now; this made sense when most servicemen were removed from the ranks of job seekers by the draft, but is outdated in the era of the volunteer Army. Including them would reduce the jobless rate.

A much larger cut would result if, as some commission members urge, the Government raised from 16 to 18 the age at which an unsuccessful job hunter could be called unemployed. Advocates of this argue that so many 16-and 17-year-olds are students that no one can measure how many really want jobs and cannot find them. Others counter that the revision would hide an all too real problem of youth unemployment. The report leaves the question unsettled.

Other recommendations would change the way jobless rates are used to guide policy. The Government last year paid out $10 billion in aid to areas that reported joblessness above the national average. But in order to figure out what their unemployment rates are, Congress forces states and cities to go through a cumbersome 70-step process; many find it impossible and submit figures that are really only guesses. The commission would instead base federal aid largely on state and local figures reported every five years by the census. The numbers would always be out of date, but at least they would represent a hard count.

A key question is to what extent unemployment figures chart real economic distress. They do not do this well at present, in large part because families in which both spouses work are now the norm rather than the exception; if one loses his or her job, the family can still get along. The commission wants to devise a "hardship index" that would count many employed people who labor at low-wage jobs and exclude the unemployed whose families still have sizable incomes.