For my day job, I wrote a thing about underemployment in Canada. I thought that it might be useful to post my method here so that other interested parties could calculate it for themselves.
The headline unemployment rate counts all those who are unemployed, available to start work, and actively looking for a job. The internationally accepted measure of the unmet need for employment includes those who are unemployed and adds those who are partially employed but want more hours, those who aren’t able to start work right away, and those who are discouraged from actively looking, but would accept work.
Fortunately, it’s much easier to calculate this statistic than it is to explain it.
Add:
unemployment +Â
All involuntary part time (CANSIM Table 282-0014) +
All “Not in the labour force but wanted work” (CANSIM Table 282-0219)
Divide by:
employed + unemployed +
All “Not in the labour force but wanted work” (CANSIM Table 282-0219)
This gets you pretty close.
There is one tiny component that isn’t directly available on CANSIM, and that is Long-Term Future Starts (LTFS).
You can estimate LTFS from R6, which is (unemployed +Â recall, replies + long-term future starts) / (employed +unemployed +recall, replies + Â long-term future starts).
The number of recall and replies is available in CANSIM Table 282-0219. Or you can request that data from Statistics Canada directly.
LTFS are not counted as part of the labour force, so just like the marginally attached group, you need to add LTFS to both the numerator and the denominator.
R8, Statistics Canada’s most comprehensive underemployment rate only counts about half of the time-related underemployment, and an even smaller portion of the marginally attached group.
R8Â = [(unemployed + discouraged searchers + waiting for recall, replies + long-term future starts + involuntary part-timers * (1 – average hours of involuntary part-timers at main job / average hours of full-time workers at main job))
/ (employed + unemployed + discouraged searchers + waiting for recall, replies + long-term future starts)]
(Definitions for all of Statistics Canada’s supplementary unemployment measures can be found in “Inside the Labour Market Downturn”, Perspectives on Labour and Income, 2011).
Statistics Canada already collects this information, and could very easily begin reporting on this measure in its monthly LFS release. Australia, for example, already releases underemployment reports on a quarterly basis, and will soon be releasing seasonally adjusted data monthly, broken down by age, sex, and region.
It’s time to update how we measure the unmet need for employment. Before you can fix a thing, you must first understand it.