The Rate of Official Unemployment is an Underestimate of Real Unemployment
We welcome you to JobBank USA and hope your job hunting experience
is a pleasant one. We hope you find our resources useful.
January 10, 2009
Our nation's unemployment rate has skyrocketed to 7.2 percent, we are told in a report released Friday, and this sky-high unemployment rate is another sign of economic crisis.
However, unemployment is among the most misleading statistics. Unemployment really is worse. How much worse? That question is open to conjecture, but real unemployment definitely is higher than 7.2 percent.
The official unemployment rate measures people who have been in the labor force during the past year. Therefore, an official 7.2 percent unemployment rate means that every 7 people out of 100 who had a job during the past year do not have a job right now.
People who are long-term unemployed are not counted. It seems that the long-term unemployed should be counted, if we are going to measure real unemployment. But somehow, that is not how the system works.
Economists differ on the real unemployment rate. One estimate pegs the number at 13 percent, another at 23 percent.
Unemployment rates, be they official or real unemployment rates, also are broken down by ethnic groups. Some analysts say the unemployment rate among African Americans is roughly double the rate among Caucasian Americans. In other reports, the difference is stated as triple. It has been reported that the unemployment rate among young African American males in major cities is in the range of 50 percent, and that one-third of these young African American males are either in prison or on criminal probation.
Too many numbers can spin the head not only of the average citizen, but even of the person who shows special interest in politics and social issues.
Still, the bottom line is that unemployment is even worse than officially portrayed. Many of us know this by intuition. We have relatives and friends and acquaintances who are long-term unemployed, or who have recently lost their jobs, or who are seeing cutbacks in their weekly work hours.
This feeds into our political debate. Should we invest tax dollars to stimulate the economy, or should we allow the economy to take its course? Should we push for more free trade agreements to expand
the economy, or should we restrict trade in the name of protecting American jobs? Should we expand unemployment compensation, or should we cut back to that people will learn to fend for themselves?
There are valid arguments on all sides. But for the basis of these discussion points, we need to know the real unemployment rate, not just the misleading official unemployment rate.
Email This Page!