I believe that the unemployment rate is incapable of calculating a sizeable portion of those whose “jobs” will end early in an economic downturn. These are the folks who I am calling “Gig-Doers” – these are the folks who push a side gig or a portion of their gigs are off the mainline employment / payroll system. Maybe they get cash, maybe they invoice against a services contract … but they are probably not fully calculated in the current numbers (critical here is the n).
Here is the BLS FAQ where you can get how they count https://www.bls.gov/cps/#faq
What I see happening as the economy slows, the Gig-Doers will be the early ones to lose their side hustle, lose material income and be compelled to re-enter the traditional employment system increasing the n. I intend to watch that over the next few months, as even this month unemployment went up as jobs created also went up – quote: “The labor force participation rate, at 63.2 percent, and the employment-population ratio, at 60.7 percent, changed little over the month; both measures were up by 0.5 percentage point over the year. (See table A-1.) The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by about one-half million to 5.1 million in January. Nearly all of this increase occurred in the private sector and may reflect the impact of the partial federal government shutdown. (Persons employed part time for economic reasons would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.) (See table A-8.)“
The bold text above is my emphasis of the unknown source of the increase in part time workers. The gig economy and the prevelance of alternative payment modes outside the traditional payroll system is going to be very difficult for our current systems to monitor with any actionable sensitivity in the early changes. How this impacts economic models, projections and business decisions is yet to see, but this is the first slowing economy we will see with a material gig element.
Here is another article estimating the size of this workforce https://www.marketwatch.com/story/if-the-economy-is-so-great-why-are-78-million-hustling-for-dimes-2018-06-01