175,000 jobs were added to the U.S. economy in February, yet the unemployment rate rose from 6.6% to 6.7%. These numbers don't seem to make much sense. If more jobs were added to the economy, shouldn't the unemployment rate decrease?
The reason for these conflicting numbers is that the government conducts one survey to learn how many jobs were created and another to determine the unemployment rate. These two surveys can at times produce different results. One of the surveys asks mostly large companies and government agencies how many people they employed during the month. This is called the payroll survey. It tells us how many jobs were created or lost. In this case, it told us that 175,000 jobs were created.
The other survey that is used asks whether the adults in a household have a job and if not, if they're looking for one. This survey tells us how many people are considered unemployed, as well as how many people are in the labor force. These two figures are used to calculate the unemployment rate. In February, 264,000 Americans began looking for jobs. Many of them were not able to immediately find jobs, resulting in a rise in the unemployment rate.
I believe that the unemployment rate can be somewhat misleading and inaccurate. The first part of the survey which determines job creation is more accurate than the second part of the survey which determines those who are unemployed. I do not think that all of the results of the second part of the survey accurately convey who is truly unemployed rather than discouraged. I think the unemployment rate should be formulated based on job creation and job loss, rather than a survey.
ReplyDeleteThe unemployment rate I would have to agree with Dylan that it can be misleading and inaccurate. Realistically jobless rate should noncontroversial because its only the percentage of people who want a job but can't find one. However, what does it really mean to look for a job?? I think this is major problem in calculating the unemployment rate because they are people who claims are looking for work but come to find they have only applied to one or two place in the past month. Are they discouraged? perhaps not because maybe they aren't really looking as hard they should because of their child, they are sick, and don't know where to look.
ReplyDeleteYou raise an interesting point, Jon. Last months figures were exactly the opposite. There were very few jobs created, yet the unemployment rate fell. The article cites the two distinct surveys as the cause of discrepancy, yet many economists blamed a drop in the labor force participation rate for last months employment data.
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