Photo: http://www.flickr.com/photos/labor2008/
We’re all hearing that the US is suffering from the highest unemployment rate in decades, over 10%. But what does the 10% stand for. A person is unemployed when he or she wants to work, is able and available to work, but cannot find a job.
The unemployment rate is the percentage of those who are employed or in the labor force compared to those who are unemployed. For example, if you take 100 people and 90 of them have jobs, then 10 of them are able and available to work but cannot find a job, then 10% or 10 of the 100 are unemployed. There is a true problem with the statistics used in unemployment.
In our nation, unemployment figures are based on the number of people who are receiving unemployment benefits. So if we go back to that original 100 people, if 6% are receiving unemployment benefits, then the unemployment rate would be 6%.
But what about people who have exhausted their benefits?
In other words, you only get unemployment benefits for a certain length of time. If that time has run out and you don’t have a job, which is very common right now, you just fall off the graphs. Of those 100, if 6 are unemployed and 20 have run out of benefits, the unemployment rate should be 26%, but it is not. It is considered 6%.
The only way to get an accurate figure would be to count all of the unemployed. But we don’t. Right now, the average in our entire nation of people unemployed is greater than 10%. This rate of unemployment is factored into a lot of indexes including indexes that state how the economy of our nation is faring.
It is also factored into a report called the US Conference Board’s Index of Leading Indicators which states how the macroeconomics of our country is faring. This factor is used in something called Keynesian economics, which determines whether this unemployment rate is a side effect of goods or services and their demands for the goods and services.
This figure is also used to determine structural problems with labor markets, minimum wage situations, how taxes should be determined and even more. This unemployment rate is very important for so many reasons. There needs to be a better way to calculate this unemployment rate.
