unemployment steven cobb center director university of north texas

UNEMPLOYMENT

STEVEN COBB

CENTER DIRECTOR

UNIVERSITY OF NORTH TEXAS

Unemployment

Simply Stated: The portion of the labor force without jobs who are actively seeking work.

There is not a distinction between part-time and full-time employment

To be officially unemployed, the clause “actively seeking work” is important

Official Unemployment rate

Types of UnemploymentFrictionalStructuralCyclical

The concern for most Economists is cyclical unemployment. A certain amount of frictional and structural unemployment is expected in a healthy, growing economy.

The most recent recovery

Why does the way we measure unemployment concern me?

FIRST, THERE IS A WEAKNESS THAT ACTUALLY SHOWS UP AS THE ECONOMIC SITUATION IMPROVES. JOB GROWTH MAY BE STRONG BUT IT COULD DRAW PEOPLE BACK INTO THE LABOR FORCE AT A RATE GREATER THAN JOB GROWTH. THE START OF THIS YEAR WAS A CLASSIC EXAMPLE. JOB GROWTH IN JANUARY WAS STRONG BUT THE OFFICIAL UNEMPLOYMENT RATE WENT UP FROM 5.6% TO 5.7%.

SECOND, THE TRUE EXTENT OF UNEMPLOYMENT CAN BE HIDDEN BY THE OFFICIAL NUMBERS.

Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons

Comparisons of the two different measures

Economic Recovery Before recession Dec. 2006 7.8 – 4.4 = 3.4% difference During recession Dec. 2008 13.5 – 7.3 = 6.2%

difference In recovery Dec. 2013 13.0 – 6.7 = 6.3%

difference While the official unemployment numbers are improving,

there is no improvement in the difference between the two measures.

Current May 2015 10.4 – 5.5 = 4.9% difference

We still have a ways to go before we are back to the pre-recession levels