Unemployment has been an essential aspect of the country’s economy because the unemployed labor force cannot pay taxes or perform other activities beneficial to the economy. However, it has been debated that the unemployment rate is an imperfect measure of joblessness in the country. The unemployment rate is imperfect because the gathered data might not be valid, and the definition of the concept might overstate joblessness.
The data gathered monthly by the Bureau of Labor Statistics might not be valid to calculate the unemployment rate. This is because the unemployment rate overstates joblessness by not considering people who recently gave up their job (USDL, 2022). For instance, if someone was seeking for employment last month but stopped this month, they represent a discouraged labor force that is ready to work if given the opportunity (Kroft et al., 2019). Marginally attached workers might have stopped temporarily working due to health or family issues, but they are not precisely incapable or not seeking a job.
The unemployment rate does not consider if the labor is a part- or full-time worker, which primarily affects the measure. The absence of differentiation between these two is seen through counting part-time and full-time workers as “employed labor force” (OECD, 2022). Part-time workers might not be earning a salary that will primarily affect the country’s economy. Consequently, the government will not be involved in improving the skill set of part-time workers and creating better workplaces.
To conclude, the unemployment rate is imperfect due to two reasons. The first factor is a measure not considering discouraged and marginally attached workers. The second reason is that there is no differentiation of part- and full-time jobs and workers. Thus, these factors shall be eliminated to create a better and more realistic measure of unemployment.
References
OECD (2022), “Unemployment rate” (indicator).
USDL. (2022). The Employment Situation – September 2022. The Employment Situation.
Kroft, K., Lange, F., Notowidigdo, M. J., & Tudball, M. (2019). Long time out: Unemployment and joblessness in Canada and the United States. Journal of Labor Economics, 37(S2), S355-S397.