In an e-mail I received from my friend M, he discusses why he feels the unemployment rate from the BLS is not very accurate.
M: BLS Unemployment Rate = ‘blah blah blah’
Because they don’t tell the whole story.
When we’re told the unemployment rate drops a tenth of a point or whatever they’re saying today, that’s based on the number of people looking for jobs. But what if they give up and don’t re-file for unemployment? What if they’ve now moved from (potential) workforce to welfare cases? As Bloomberg reports:
“The jobless rate declined as 193,000 people left the labor force and the number of unemployed dropped by 156,000. The share of the eligible population holding a job declined to 58.1 percent, the lowest since July 1983.”
Isn’t that last statistic really the one we need to be looking at?
C:
Clearly the long term unemployed is a tremendous problem and vicious cycle. Second to that are the underemployed. I saw a link in Greg Mankiw’s blog to an article by Ken Rogoff. He thinks this recession is really more like the great depression due to the underlying cause–overleverage. With the Eurozone’s sovreign debt and banking capitalization problems, I’m not sure we won’t end up with another great depression.
Many commentators have argued that fiscal stimulus has largely failed not because it was misguided, but because it was not large enough to fight a “Great Recession.” But, in a “Great Contraction,” problem number one is too much debt. If governments that retain strong credit ratings are to spend scarce resources effectively, the most effective approach is to catalyze debt workouts and reductions.
http://www.project-syndicate.org/commentary/rogoff83/English
I don’t think happy thoughts by the BLS will help much.
T:
Clearly the unemployment rate is not without fault, one really needs to understand what each ratio truly means and how we ‘foot’ to the current population number. If anyone out there can provide clear instruction on how to do this, I would like to hear from you.
Talkback