DEFINITION of Concealed Unemployment

The unemployment figures released each month by the Bureau of Labor Statistics may not be as accurate as some think. That’s because in addition to not counting anyone under age 16, retired, imprisoned, or spouses that stay-at-home, those who’ve simply given up looking for a job are also left out. Concealed unemployment refers to a group of out-of-work people who are not counted in official unemployment statistics for a variety of reasons.

BREAKING DOWN Concealed Unemployment

Concealed unemployment figures are typically not used in statistical calculations. People who are out of work do not always file for unemployment benefits, and it is these potential workers that create concealed unemployment.

Marginally attached workers” or those who are considered concealed unemployment, include people who are over-qualified for currently available positions and aren’t willing to take a cut in pay. Or, a specific sector might be lagging in jobs and taking a job outside of his or her specialty would require more education or training. Then, there are others who simply take a long break from work. Someone needs to have looked for a job in the past four weeks to be considered unemployed by the BLS.

Another group not considered unemployed are “involuntary part-time workers.” These are people who return to work for less than 35 hours per week due to economic reasons, but who want to work full-time.

Many people believe that only those collecting unemployment are considered unemployed, but that’s a misconception. Not everyone who loses or quits a job qualifies for unemployment, so this wouldn't be an accurate metric.

Although the above worker types aren’t used to determine the monthly unemployment rate, the BLS does provide what it calls a table of “alternative measures of labor underutilization” that accompanies the official figures. This way of tracking unemployment rates is also used by Canada, Mexico, Australia, Japan, all of the countries in the European Economic Community.