Unemployment rates

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Definition

Unemployment rates are based upon a household survey of about 100,000 people conducted monthly. It counts percentage of people in the labor force who do not have work and are actively seeking work as unemployed. This measure excludes from the work force not only people commonly though of as not in the workforce, such as retirees, homemakers and students, but also "discouraged workers" who aren't doing something else instead of being employed, but have given up looking for work. Thus, the official unemployment rates systematically underestimate the "true" unemployment rate of the "unemployed" plus "discouraged workers". Discouraged worker numbers tend to be cyclical, increasing in bad economic times (and thus understating unemployment at its peaks) while decreasing as recoveries are viewed as taking hold.

Related Measures

Unemployment rates are not, contrary to popular belief, based on new unemployment claim filings (a seperate measure) or employment figures. Employment figures (e.g. new jobs and lost jobs) are based on a nearly complete polling of large employers and a representative sample of small employers. Many people consider employment figures to be more accurate than unemployment household surveys, because the more sophisticated HR people answering the standards can answer accurately and completely for a large number of people. But, employment figures tend to undercount small businesses during economic recoveries which blossom faster than government statisticians can find them.

The unemployment rate plus the inflation rate is sometimes called the Misery Index which is considered to be a politically useful measure of the state of the economic in the eyes of voters.

Historical Data

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