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At the height of lockdowns the unemployment rate reached 14.7% in April, its highest level since 1940. But as states eased those restrictions, the rate quickly fell. It dropped again in September, falling from 8.4% to 7.9%.
While that sustained drop signals an economy moving from recession to growth, it’s also severely undercounting joblessness.
It boils down to how the Bureau of Labor Statistics (BLS) calculates the official unemployment rate: Only out-of-work Americans who are searching for new positions are categorized as unemployed. If the jobless aren’t searching, they get thrown out of the civilian labor force altogether. (The unemployment rate is calculated by dividing the number of unemployed Americans by the civilian labor force count).
That’s been the case during the pandemic, with millions of jobless Americans choosing to wait out the virus and stay-at-home order before starting their job search. Recent numbers also show a stunning number of women have recently left the workforce, a trend that is likely tied to the fact that many schools have not resumed in-person learning or have implemented hybrid schedules. According to Fortune‘s The Broadsheet newsletter, 80% of the 1.1 million workers who dropped out of the workforce last month were women. Overall the civilian labor force declined from 164.5 million in February to 156.5 million in April. It has since climbed up to 160.1 million—but it’s still down 4.4 million.
If the 4.4 million jobless Americans who’ve yet to return to the workforce were to be included in the unemployment rate—what Fortune considers the “real” unemployment rate—it would sit at 10.3% in September, Fortune calculates. That’s well above the 7.9% official unemployment rate calculated by the BLS.
The real unemployment rate is falling too: It peaked at 18.9% in April, when the official unemployment rate was at 14.7%. But a real unemployment rate still sitting above double digits underscores that we have a long way to go for a full recovery: Both the real and official unemployment rates sat at 3.5% in February.
Jobless Americans often leave the workforce during deep recessions—but nothing on the level we’ve seen during the pandemic. The unemployment rate peaked at 10% in October 2009 during the Great Recession era. At the same time the real unemployment was 10.6%, according to Fortune‘s calculations. The October 2009 labor force was down about 1.1 million from the year prior—compared to the 4.4 million in September 2020.
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