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It’s Time To Scrap The Unemployment Rate Metric

It’s Time To Scrap The Unemployment Rate Metric

Sometimes metrics that were once valuable become less so. Take actual birth weights; there was a time where that number was a major selection parameter for cattlemen. Today, however, we have birth weight EPDs, which are 7-9 times more accurate than birth weights [3].

Even with that said, the birth weight EPD [4] is an indicator trait, and we have calving ease EPDs that make birth weight EPDs far less valuable. Throw in the opportunity to have a young bull DNA-tested, and birth weight, while important to collect in and of itself, has become fairly meaningless.

The same can be said for the federal government [5]’s unemployment number. It originally was intended to give us an indication of how many people are employed, and whether the economy is creating or losing jobs. And while it used to be able to do that, collection quirks and new circumstances have rendered the number worthless. Last week’s unemployment number illustrates just how meaningless that number has become, and it’s time to replace it with a more meaningful metric.

The media and politicians are doing everyone a disservice by continuing to look at this number as a valid indicator. Unemployment fell to 6.7% last month, which is the lowest rate since October of 2008. For perspective, that was right before Obama [6] was elected the first time. At first glance, that would be good news, but the economy only created 74,000 new jobs in December, which is the worst job creation total in three years, which have been dismal from the job-creation standpoint.

 

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The reason the unemployment [8] rate continues to fall is that people are simply giving up looking for work. We simply have stopped counting the unemployed as unemployed.

Only 56.1% of the people eligible to be employed are employed today. Only 62.8% of the population is either working or looking for work – a 36-year low. If unemployment benefits aren’t extended, that number will drop even more, as looking for a job is a requirement of receiving those benefits. 

We’re looking at historically terrible numbers when it comes to employment [9], but it’s not being talked about in its proper context. It’s time to talk about the percentage of eligible Americans who aren’t working; that’s the number that must rise, and rise quickly.

 

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