Why Do We Use the Unemployment Rate?
Thursday October 30, 2008
In Why Do We Use the Unemployment Rate? I ask:
"[I]s the unemployment rate really the best measure of the health of the labor market?"
You can probably guess my answer. First I speak out against the Coase Theorem. Now this! Is there any sacred cows I won't try to skewer?
"[I]s the unemployment rate really the best measure of the health of the labor market?"
You can probably guess my answer. First I speak out against the Coase Theorem. Now this! Is there any sacred cows I won't try to skewer?
Comments
If only the Unemployment Figures reported by the Government were accurate…Clinton Administration changed the methodology to eliminate those who had run out of unemployment benefits ..REAL UNEMPLOYMENT IS RUNNING BETWEEN 12 to 14 PERCENT!!
http://www.shadowstats.com/
Well is it?
There is such a term as ‘underemployment.’
In Australia I can say that while unemployment figures remain under 5%, I still say there is great underemployment because:
-those many on welfare ‘programs’ with supposed employment which is actually anti-productive (mowing fields of grass in the middle of nowhere or doing anything the bureaucrats managing the process can think up, there are hilarious cases)
-those claiming to be disabled due to the welfare incentive (why is Australia has among the highest disabled rate in the world? -incentive for much of the gap)
-those working part-time who would prefer to be full-time
and so on..
While we’re on the subject can you please answer this: Why is there any unemployment at all?
Logic tells me that as long as someone can do something worth more than the cost of managing them, they will be employed.
Do you think I’d be right that saying the only causes for permanent unemployment (temporary is a matter of cycles) is:
-people not able to produce more value than the minimum wage + the hassle of hiring and managing that staff (including training if necessary, but at this level this could be very minimal) + the liability of the potential of getting sued for workplace safety (and other labour-law) breaches.
-welfare alternative
-genuine disability (inc. old-age)
-child labour-law
-aristocracy, dependence
I am not sure what we would achieve if total hours or total wages paid were the major indicators of the labour market. These could easily be mainpulated and spun around aswell -managers will typically work more hours than a ‘factory worker’would, so therefore if a manager worked 10 more hours (unpaid) a week but the factory worker dropped 5 hours per week, could we really see the benefits of the hours worked indicator?
We should just cut to the chase and include everyone who is able to work (but isn’t) in the unemployment figures. I am not a fan of cyclical factors because these can be manipulated to suit the industry.
I think the first thing to be done is an agreement on which definition of unemployment should be used. Countries such as South Africa use two different definitions (strict-narrow) that are changed regularly according to the results desired to be presented to the public.
After having a global definition (and the same kind of surveys) then we can compare the countries based on unemployment too…(not only GDP growth or inflation rates)
Somebody needs to get his facts straight. The first commentor needs to go to the bureau of labor statistics to see how they figure the unemployment rate the clinton administration did no such thing.