While this is certainly an improvement over the high during the last recession, when, in October 2009, unemployment surpassed 10 percent, these unemployment numbers don’t provide the whole picture.
Unemployment numbers are incredibly valuable, providing a view into the health of the economy. However, they don’t account for a few important portions of the population.
There are many misconceptions when it comes to unemployment data. First and foremost, the unemployment rate isn’t solely tied to the number of people claiming benefits. The government understands that there are unemployed people who aren’t filing claims. This can happen because the individual isn’t eligible or had their benefits run out.
Second, it isn’t a perfectly accurate reflection of the number of unemployed people. For that, the government would have to contact the entire population of the U.S. to get those statistics. That process would be too cumbersome.
What Unemployment Numbers Tell You
Instead, the Department of Labor and BLS use a monthly current population survey. They interview approximately 60,000 eligible households and extrapolate the data from there. Which households are included changes regularly in an effort to maintain the integrity of the data.
This means that the unemployment numbers give you a general idea of the rate of unemployment, regardless of whether all individuals are filing claims, but can’t be 100 percent accurate.
There are also specific requirements to count as unemployed. The individual must be jobless, currently seeking a job, and be available for work. If a person has any form of employment, they are employed. If a person isn’t looking for work or isn’t available, they don’t qualify as unemployed, or even part of the labor force.
What Unemployment Numbers Don’t Tell You
One flaw in the calculation of the unemployment rate is that is doesn’t account for individuals who would like to work but have given up trying to find a job.
For example, if a person’s skill set has become obsolete thanks to technological innovation, he or she might not be able to easily secure another position. After a period of searching and rejections, they could assume they’ll never find work, so they give up looking.
Individuals who make that decision don’t meet the definition of unemployed. Instead, they don’t qualify as part of the labor market.
Another shortcoming involves underemployment. Underemployment happens when a person has a job, but it falls short of their capabilities and desires.
For example, if a person with a degree in human resources has to work as a fast food employee because they can’t find an HR job, they could be underemployed. Yes, they are working, so they aren’t unemployed. However, they aren’t fully utilized either.
Similarly, a person who resorts to a part-time position in their field because they haven’t found full-time work can also be underemployed. However, this relies on them having the desire to secure more hours.
While the BLS strives to include underemployment estimates in monthly announcements of employment statistics, the agency refers to the figures as alternative measurements of labor underutilization. However, the BLS says it continues to update its methodology for compiling data on underemployment.
Additionally, the agency releases different types of employment statistics on a weekly and monthly basis, including initial jobless claims and average employee pay.
Ultimately, the unemployment numbers aren’t perfect. They provide a look at part of the picture, but not the entirety of the situation.
That doesn’t mean the metric isn’t valuable. However, it’s helpful to know what it does and doesn’t tell you, so you can make educated assessments of what it means.
Do you consider yourself to be underemployed? Tell us about it in the comments below.
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