Labor supply, unemployment, and declining union membership in 2011

U.S. Labor Force

Labor Supply and Demand

In June, the U.S. Department of Bureau and Labor Statistics (BLS) reported that the unemployment rate was essentially unchanged at 9.1%. 45.1% of this number are 6.2 million long-term unemployed (those jobless for 27 weeks and over), an increase of 361,000. Not included in this number are 8.5 million involuntary part time workers. According to the BLS, these individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. Also not included in the unemployment rate are 2.2 million persons who were marginally attached to the labor force. The BLS reports that these individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months; however, they were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

These statistics indicate a high rate of unemployment, which equates to a high supply of labor. According to the law of supply and demand, as the supply of something increases, the cost goes down. This is reflected in the fact that over the past 12 months, average hourly earnings have only increased by 1.8%. Additionally, union membership has declined. The BLS reports that the union membership rate -- the percent of wage and salary workers who were members of a union -- was 11.9%, down from 12.3% a year earlier. In 1983, the first year for which comparable union data are available, the union membership rate was 20.1%, and there were 17.7 million union workers. Union jobs typically are higher paying jobs. According to the BLS, union members had median usual weekly earnings of $917, while those who were not represented by unions had median weekly earnings of $717. One reason for the decline in union membership is the decline in public sector employment, especially in education.