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The Trouble With Unemployment Math

The Washington Post today runs a timely reminder that the nation’s unemployment rate will likely rise even as hundreds of thousands of jobs start being created.

Thomas Dixon
News
Last updated: Jul 31, 2020 | Apr 05, 2010

The Washington Post today runs a timely reminder that the nation’s unemployment rate will likely rise even as hundreds of thousands of jobs start being created. The reason is simple: The Labor Department equation used to crunch the jobless rate doesn’t consider those folks who’ve been so discouraged by the job market that they’ve stopped looking for work altogether. As the economy recovers, though, those folks will re-enter the official jobless pool, hiking the unemployment rate even as businesses are hiring. The Post provides more detail:

The number of people looking for jobs rose by more than 200,000 last month compared with February, according to the Economic Policy Institute — and that’s a good sign, economists say. It means that Americans are seeing more jobs being created and that they’re optimistic about their prospects.

But the supply of new jobs — 162,000 in March, the biggest monthly increase in three years — will accommodate only a fraction of the unemployed. Some economists say the jobless rate will not recede to pre-recession levels near 5 percent for four more years.

If anything, this is reminder that the official jobless rate is always misleading — and that lawmakers (not to mention journalists) would do better to recognize the broader numbers when tackling the topic.

Thomas Dixon | He creates the ideal marketing experience by connecting online brands with their target audiences. He recently completed a research paper on consumer conversion and took part in a community project on SEO optimization. Thomas is working on his Bachelor of Arts in Communications and plans to intern in an online marketing department soon.

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