Unemployment Absurdity

24Jan11

I heard on the radio earlier today a report (one of the almost weekly reports) on the latest unemployment figures. The thing that struck me the most was the statement that for unemployment rates to go down there needs to be a decrease in new claims. That seems a little like saying to someone “To cure your pneumonia we need to stop your cough.” It is looking at a symptom not the actual problem.

Of course it is always easier to look at symptoms and not problems. We do it all the time. It feels like the quick fix. We don’t feel well and go to the doctor so they can prescribe a pill. We get overwhelmed by debt and take out a loan to “consolidate”. Instead of solving the actual problem, we try to just cover things up. We fix what feels the worst right now and ignore the rest.

As far as unemployment goes, the problem isn’t how many people are filing unemployment claims. It doesn’t matter how many people are collecting unemployment. The unemployment rate is a number created to try to make a complicated issue easy to understand. But by doing that we are completely breaking the actual understanding of the issue. It only figures out the number of people who are filing unemployment claims against the calculated total “eligible workforce”.

As has been mentioned many times in many places, it doesn’t take into account the person who has gone past the end of eligibility for unemployment benefits. It doesn’t take into account the people who have given up looking for work. It doesn’t take into account the person working a part time job because it is the only thing they could find and they figure part-time is better than no-time. It doesn’t account for the person who sees collecting unemployment as accepting charity or admitting they failed. It doesn’t account for the person who was self-employed but is now looking for work because their business failed. It doesn’t account for the person who doesn’t file simply because they assume they won’t qualify. It doesn’t account for the person who was unemployed and got a job but at a huge cut in pay from their previous job. It doesn’t account for the person working two or even three full-time jobs because one just doesn’t bring in enough money to support their household. It doesn’t take into account the people outside of the “eligible workforce” who either have or need jobs.

Should a 17 year old looking for a job count as unemployed? If they are still living at home it is not likely that they really need the job to survive, but there are 17 year olds that for one reason or another have moved out from home. Or if they are still at home their parents aren’t making enough money so them having a job is a matter of survival. Then you have the 25 year old that has moved back in with their parents or never has left. When do you count them as “unemployed”?

Some might argue that looking at the “employment rate” is a better measure. It might be better but not by much. It has many of the same issues. Do you count the 17 year old living at home student with a 20 hour per week, minimum wage job as a full employed person, half because of the hours, three-quarters because of the pay compared to the poverty level, one-sixth compared to US median income, or zero because they don’t really need the job? Similarly does a CEO job count as just one, two because they are actually working 80 hour weeks, 100 because they make that much more than the median income or 440 compared to poverty guidelines. Counting the number of jobs by “full-time equivalents” would put a minimum wage job (that few could survive on) on a par with the CEO of a major corporation. Do you count by salary? You can’t really break the CEO’s job into 440 (or even 100) pieces. And if you say the 17 year old should not count because they do not need the job, but the CEO probably has a 401(k) and other investments worth millions of dollars so does he really need the job either? Do you count the 75 year old who wants to work to feel useful as “unemployed”? Is he part of the “eligible workforce”? Does it make a difference if he needs the money because Social Security is not enough? What if his child is that CEO that could afford to take care of him? What if they had a fight 25 years ago and haven’t even spoken since then?

Our continued attempts to put a simple number on unemployment just cheapens the issue and pushes us further from finding a real solution. Or to be more precise solutions. I am not an economic expert, but I am sure that there will not be one solution that will fix everything.

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One Response to “Unemployment Absurdity”

  1. 1 boomerjack

    Great observations and questions. Unable/unlikely to find a job at 62, I’ve begun to collect Social Security even though I’d rather be working. I’m not listed among the unemployed.


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