Web Wealth: Explaining the unemployment rate
October's jobless rate, pegged Friday at 7.3 percent, was up slightly from September. But the number's meaning is a source of monthly public confusion. Here are some explanations.
October's jobless rate, pegged Friday at 7.3 percent, was up slightly from September. But the number's meaning is a source of monthly public confusion. Here are some explanations.
The arm of government that computes the unemployment rate is the Labor Department's Bureau of Labor Statistics. This FAQ on the bureau's site explains how the number is reached and what it means. It starts with the question "Why does the government collect statistics on the unemployed?" When a willing worker is unemployed, everybody loses, it explains. "Workers and their families lose wages, and the country loses the goods or services that could have been produced" and without income to spend, one job loss can lead to another.
The opposite of an unemployment rate would be the employment rate - the percentage of available workers that actually have jobs. At About.com Economics, Jodi Beggs explains the obvious, but seldom, referenced figure. An unemployment rate of 7.3 percent means 92.7 percent of the workforce has a job, though many in that group may be working part time, or at jobs that are poorly paid, or for which they are overqualified. All those are the so-called underemployed.
If you are underemployed, what to do? Jay MacDonald, at Bankrate.com, says it is possible in some cases to collect unemployment benefits when your job is cut way back. "The bad news is, too much part-time work could cost you your underemployment benefits," MacDonald writes. He quotes an official of the National Employment Law Project as saying: "In most states, you can probably work one or two days part time, maybe even three, and probably still get some kind of partial unemployment benefits. . . . But generally, if you're working much more than that, the likelihood of you qualifying drops substantially."
Alternative unemployment rates abound - compiled by independent and governmental groups. The Bureau of Labor Statistics' own monthly page of "alternative measures" offers a selection of rates going as high as 13.8 percent for October. That number represents a seasonally adjusted rate for the total of the typically counted unemployed, "plus all persons marginally attached to the labor force, plus total employed part-time for economic reasons." That 13.8 percent figure was down from 14.5 percent in October 2012.
Interesting, and much criticized, alternative numbers come from Shadowstats.com, by Walter J. "John" Williams, who contends government numbers are manipulated for political reasons. You be the judge.