For years I’ve been trying to understand what’s truly defined in our unemployment report. At times it’s more confusing than it needs to be. I’d prefer just a simple number versus the breakdowns we’re now subjected to especially the actual reported percentage based unemployment number.
“The unemployment rate measures the share of workers in the labor force who do not currently have a job but are actively looking for work. People who have not looked for work in the past four weeks are not included in this measure.” How convenient; if you have not been looking for a job over the last four weeks you essentially drop out of the calculation significantly reducing the reported number. That makes absolutely no sense whatsoever; you’re essentially unemployed, you should be counted not hidden in the fluff.
Other labor market statistics are reported using basic survey estimates of people employed, unemployed or not in the labor force:
The number of people in the labor force is the sum of the employed and the unemployed; the labor force level being the number of people who are either working or actively seeking work. So in order to be part of this calculation you need to want to work. Doesn’t make a lot of sense to me but much of what the government reports to us doesn’t make much sense either.
The national unemployment rate reflects the number of unemployed people as a percentage of the labor force. Again, if you haven’t been looking for work over the last four weeks you’re not part of this number.
The labor force participation rate measures the number of people in the labor force as a percentage of the civilian population 16 years old and over. It’s the percentage of the population that is either working or actively seeking work. Kind of a plug figure from what’s reported and again, if you are not looking for a job you essentially just don’t count.
The employment-population ratio measures the number of employed as a percentage of the civilian population 16 years old and over. It’s the percentage of the population that is currently working. Finally, a rate I can dig my teeth into; if you are working you are counted, the rest are just living off someone else.
Without a doubt the unemployment rate as headline reported in the United States is grossly underreported. The actual number of unemployed is much higher than our government wants you to believe. Maybe there should be another number including (1) living in my parent’s basement; (2) the homeless living on sidewalks; (3) drug dealers; and (4) anyone operating under the radar not declaring their incomes or paying taxes. Maybe even start counting illegal immigrants; wait, they’re the ones who are actually working.
A reported unemployment rate under 4% is statistically unrealistic but based upon the Federal Reserve and how they look to define recession and the like, they’re basing their decisions in what amounts to be a “pie in the sky” number. If this is the number we use to determine future economic criteria we are worse off than most people think, especially those who are in control of the decision making process.
Face it, as Dolly Parton professes . . .
. . . it would be nice if everyone actually worked, we’d be better off but most have learned how to live off another source; it’s time to turn the clock back and start working “9 to 5” again.
Hope you enjoyed this post. I’m just a young 68 years old; my Dad became a broker when I was 13. It’s time for me to ‘give back’ to all of you what’s in my head. It’s not always pretty but it’s based on history . . . and history, unchecked, repeats itself.
Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at dzimmer@substack.com so we can further help. Keep your eyes tuned to our upcoming launch of Tradrr . . .