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Covered vs. Uncovered Workers

June 7, 2010 by Luke Mason

The recent economic turmoil has led to a lot of scrutiny of job counts from Felix Salmon, Mike Mandel, and others.

To clear up some of the confusion we thought it would be helpful to take a quick look at the difference between “covered” workers (those covered by unemployment insurance) and “uncovered” workers (those not covered by unemployment insurance). The Quarterly Census of Employment and Wages, published by the Department of Labor, is the source for covered workers, and the Bureau of Economic Analysis (through its Regional and State Personal Income data) is a key source for uncovered workers — e.g., self-employed or contract workers.

To show the dynamics between covered and uncovered jobs, we’ve run the employment numbers for the Chicago MSA. The difference between the datasets, and the trends they highlight, add an important layer to this discussion.

The chart below shows that the number of uncovered workers in Chicago (blue line) has grown from 2002-2009, while the number of covered workers (orange line) has decreased slightly. The green line is the total count of all workers (blue + orange), which represents EMSI’s complete employment dataset. If you were to only look at the data derived from unemployment insurance coverage (QCEW), you would be looking at only one part of the picture.  And this phenomenon, while substantial at the aggregate level, is even more pronounced in more detailed sectors. We highlighted this in a recent analysis of financial jobs.

The next table gives us a sense of the relative proportion of covered vs. uncovered workers by industry for 2009. Certain industries like real estate, construction, professional services, and even health care have high numbers of uncovered contract-type workers.

Other thoughts:

  • Industries with highly structured production and/or processes have the lowest percentages of non-covered workers. Manufacturing, utilities, and management of companies and enterprises all have less than 4% non-covered workers.
  • Industries that have a high number of uncovered jobs like sole-proprietors and full-commission sales reps have larger percentages of non-covered workers: nearly three-quarters of the jobs in Chicago’s real estate sector are not covered by unemployment insurance.

So when you are trying to get a sense of how employment is changing in your region, don’t forget the difference between covered and uncovered workers.

If you would like a detailed analysis for your region, please contact Rob Sentz.

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