About That Unemployment Rate…

February 8, 2012

Why don’t things seem better- the news says the unemployment rate fell to 8.3 per cent?

This line only shows the folks counted in U-3...

Photo

The unemployment rate they talk about in the press is the U-3 rate. The unemployment rate that the people in the country are really feeling is called the U-6 rate.

The U-6 rate includes the unemployed, the marginally attached, and persons who are actually employed but who work fewer hours than they would like.

While that  8% rate may sound like a real improvement,  the fact is that in human terms, not filtered through the  rose-colored lens of policy wonks or reporter-speak, the real rate is U-6 or almost double the “official” U-3 rate.

Critical thinking is about recognizing and challenging assumptions. What assumptions are built into the people talking on TV about unemployment?

As this graph shows, one assumption is that they aren’t even talking about darn near half the people who are “unemployed, marginally attached, and persons  who are actually employed but  who work fewer hours than they would like.”

How about that unemployment rate?

Graph