In economics we call individuals who are seeking a job, unemployed. Whereas those who are working we call them employed. This article dives into the what the unemployment rate actually means and how our economy is impacted from the job market. In most cases we only use metrics such as unemployed and employed to get a general idea of how many people are working in the job market. However, there is a third metric which is not always used which is called, "missing workers." A missing worker is a person that has the potential to work at a job but, because of the weak job market it's increasingly difficult to earn a position in a corporation such as Dell which manufactures computers and other software in the technology industry.
In August, the total number of missing workers was 2,220,000. Whereas the official unemployment rate is 4.9%. These numbers are recalculated monthly to ensure an aggregate and accurate measurement of the economies health. Is there an economic relationship between the numbers?
Lets dive into the numbers:
May 2016 Missing Workers: 3,020,000
August 2016 Missing Workers: 2,220,000
Result: From May to August the overall economy experienced a 36% decrease in missing workers. More workers are getting jobs and corporations are hiring.
What about the Unemployment Rate? From June to August the unemployment rate stayed constant at 4.9%
Result: The data is telling us that the overall labor force is staying constant even though the number of missing workers is decreasing. To go deeper in this issue we can assume that the employment rate and unemployment rate has seen very little movement in the past 3 months.
I can conclude that since the missing workers are starting to be employed, we can expect the unemployment rate to decrease in the coming months.
http://www.epi.org/publication/missing-workers/
The conclusion, that unemployment will soon decrease, is good. However, is the reason that these 'missing workers' we're able reenter the workforce the product of a declining labor participation rate? With an aging generation of baby-boomers, masses are exiting the workforce opening it up to these 'missing workers'.
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ReplyDeleteThis article is very interesting, because people is getting hired and this is not affecting the unemployment rate which has been the same (4.9%) for the last 3 months. But it should have an effect on the employment participation rate and in the labor force participation rate, because since the missing workers are not actively looking for a job they are not considered in the labor force. So this decrease of 36% in the missing workers about 800.000 workers that now are employed should be reflected in the labor force participation rate and increase the amount of people in the labor force. Also trying to understand the radical decrese in the number of missing workers, one of the many reasons for this to happen might be the big increase in U.S. employers adding 275,000 workers in new jobs in July. But it would be interesting to know how many of the missing workers where hired in this new jobs.
ReplyDeleteThe website shows a graph of the unemployment rate and what the unemployment rate would be if the missing workers were actively looking for jobs. I found this to be an interesting comparison. Many people are commenting on the current 4.9% unemployment rate, however if the missing workers were accounted for the unemployment rate would be at 6.2%. While yes, the 4.9% is good, it is just important to remember that there are other factors that might not be displayed in that percentage, but should still be taken into consideration when assessing the labor market.
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ReplyDeleteFor the government to view a person as unemployed, you have to be looking for a job but missing workers can choose not to look for jobs which prevents them from been added to the official unemployment rate. Although, on the website, it shows the unemployment rate which is 4.9% but when the missing workers are added, it increases to 6.2%. This shows that unemployment rate would respond to the decrease of missing workers if they are added to the labour force. It does seem that they are not added to the labour force if the unemployment rate stays constant when missing workers are decreasing. I feel like missing workers who are seeking jobs should be added to the unemployed rather than categorized with other missing workers who are not actively looking for jobs to get a better estimate of the unemployment rate.
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