ANALYSIS, COMMENTS, THOUGHTS, AND OTHER OBSERVATIONS IN DR. SKOSPLES' NATIONAL INCOME AND BUSINESS CYCLES COURSE AT OHIO WESLEYAN UNIVERSITY
Saturday, October 8, 2016
More Realistic Unemployment
The Bureau of Labor Statistics (BLS) just recently reported a national unemployment rate are just over 5% for the month of September. Relying completely on this percentage of unemployment is risky in the sense that a lot of information about the country's unemployment and current economic direction is left out. The official and national unemployment rate is known at us U-3 rate. The U-3 rate is composed of the total unemployed divided by the civilian labor force. This rate has just been reduced down to its pre-recession, 2008, rate. This is great, but does not depict everything. The U-6 rate has just been reported at 9.7% for September. This a more broad definition of unemployment and includes the unemployed, the underemployed, and the discouraged workers. Compared to pre- 2008 recession where the U-6 rate was 8.8%. Clearly the US unemployment rate has not fully recovered but has made positive strides in the recent past in getting back to pre-recession rates.
This article also touches on the decreasing labor participation rate in the US. The participation rate has fallen since the recession, most believe largely due to the baby boomers. The baby boomers are getting older and starting to retire which has lead to a reduction in the labor force participation. With the decrease in labor, it is predicted that the average hourly wage will increase from the $25.79 wages in September.
It is important to keep in mind that there are other factors that should be taken into consideration when looking at the unemployment rate. As mentioned, completely relying on the percentage alone may not give you the full picture, yet it still seems like people are getting caught up into that percentage and possibly reading too much into it. The baby boomers retiring is a good explanation for the decline in the labor participation rate. You could also say that more people are choosing to go to college after graduation instead of going out and finding a job like in the past. More people may even be choosing to go back to school too. These would both be other explanations for the decreased labor participation rate.
It is interesting to see that there are different unemployment rates and the national unemployment rate is relied on the U-3 rate only. Although, from the graph, it shows that they are all decreasing but have different percentages. You are right on saying that a lot about a countries economic situation is left out. Labour Participation decreasing is a short-term effect because baby boomers began working at a early age whereas, now, we go to college before we begin to work. So in a long-run, it would increase.
This article is interesting, because even if it shows that the economy has been recovering after the crisis in 2009 and people think that the unemployment is the same than before that (around 5%), we should also look at things like the U-6, because this is affected by things like the discouraged workers and now is higher that it was before. So it is important to look deeper and not just look at the percentage of the unemployment (U-3) because it gives you information but for a better analysis you need to look more than that.
Six measures of the unemployment rate reveals only a fraction of a countries circumstances. The decrease in unemployment rate is affected by people pursuing more degrees in the educational field than just the standard four year period, the Baby Boomers are retiring, but also job specifications are more crude (requiring more diversification and experience).
I find this very interesting that they have more than one unemployment rate, and it is also interesting that the unemployment rate is decreasing. Also, the U-6 shows more discouraged workers now than before, which shows that the U-3 doesn't include enough for us to accept it fully, especially because the U-6 shows an increase in discouraged workers. They aren't included in the U-3, so the fact that the unemployment rate shows a decrease can possibly be misleading. Good blog Luke!!!!!!!
It is important to keep in mind that there are other factors that should be taken into consideration when looking at the unemployment rate. As mentioned, completely relying on the percentage alone may not give you the full picture, yet it still seems like people are getting caught up into that percentage and possibly reading too much into it. The baby boomers retiring is a good explanation for the decline in the labor participation rate. You could also say that more people are choosing to go to college after graduation instead of going out and finding a job like in the past. More people may even be choosing to go back to school too. These would both be other explanations for the decreased labor participation rate.
ReplyDeleteIt is interesting to see that there are different unemployment rates and the national unemployment rate is relied on the U-3 rate only. Although, from the graph, it shows that they are all decreasing but have different percentages. You are right on saying that a lot about a countries economic situation is left out. Labour Participation decreasing is a short-term effect because baby boomers began working at a early age whereas, now, we go to college before we begin to work. So in a long-run, it would increase.
ReplyDeleteThis article is interesting, because even if it shows that the economy has been recovering after the crisis in 2009 and people think that the unemployment is the same than before that (around 5%), we should also look at things like the U-6, because this is affected by things like the discouraged workers and now is higher that it was before. So it is important to look deeper and not just look at the percentage of the unemployment (U-3) because it gives you information but for a better analysis you need to look more than that.
ReplyDeleteSix measures of the unemployment rate reveals only a fraction of a countries circumstances. The decrease in unemployment rate is affected by people pursuing more degrees in the educational field than just the standard four year period, the Baby Boomers are retiring, but also job specifications are more crude (requiring more diversification and experience).
ReplyDeleteI find this very interesting that they have more than one unemployment rate, and it is also interesting that the unemployment rate is decreasing. Also, the U-6 shows more discouraged workers now than before, which shows that the U-3 doesn't include enough for us to accept it fully, especially because the U-6 shows an increase in discouraged workers. They aren't included in the U-3, so the fact that the unemployment rate shows a decrease can possibly be misleading. Good blog Luke!!!!!!!
ReplyDelete