What is “invisible unemployment”? It’s discouraged workers and part-timers who want more hours. The official unemployment rate doesn’t consider them unemployed. So when we talk about the official unemployment rate—now at a lowish 5.8 percent—we’re ignoring these workers. They’re statistically invisible.
Here’s a picture of invisible unemployment (in blue) vs. official unemployment (in red). Since early 2010, the number of unemployed Americans has declined by twice as fast as the number of discouraged/part-timers (42 percent vs. 21 percent).
In 2002, official unemployment swamped invisible unemployment. The official unemployment rate was an accurate description of the labor force. But the spread between invisible and official unemployment is shrinking. In the last 20 years, the six months with the smallest gaps between official and invisible unemployment were all in 2014. That means the official unemployment rate is getting worse and worse at describing the real conditions facing American workers.