The Unemployment Rate
In the context of present-day developments, the unemployment rate appears to be a crucial indicator for evaluating the economic situation in different countries. It reflects the general living standards of the population and the level of poverty. However, the question about which categories of workers should be included in it, as, occasionally, the formal rate does not match reality. Therefore, the purpose of this paper is to review the article of Veronika Dolar on this issue and present personal reflection in this respect.
Summary
The article Latest Jobs Report Shows Why the Unemployment Rate Needs Fixing regards the issue of the inadequateness of the currently established and widely used formal indicator in the United States. The author, Veronika Dolar, is a labor economist, and she intends to present her reflections in this regard. She states: “one of its biggest shortcomings is that it doesn’t include people who have given up looking for work” (Dolar, 2021, para. 4). Therefore, although the unemployment rate declined, it does not include the number of discouraged workers.
However, the figures involve the individuals who work without payments or adhere to part-time employment, which is not essential. Despite the fact that it appears to be challenging to evaluate the number of unemployed citizens, it is crucial to make attempts in order to address economic hardships competently (Dolar, 2021). Pursuing this aim, the author refers to the “real unemployment rate” established by the media (Dolar, 2021, para. 9). Although this number is highly likely to be close to reality, the question of the inclusion of furloughed workers causes multiple discussions.
Discussion
I can agree with the author on the opinion that it presents a difficult to estimate the unemployment rate. It should involve the number of out of labor force citizens, as it is a crucial indicator for comprehension of the current economic situation. In order to achieve the most true-to-reality number and analyze the labor force participation rate, it is essential to evaluate the position of part-time and furloughed workers.
Although it is logical to refer to the aforementioned categories as employed individuals, their position is unsteady. They may easily join the ranks of out of labor force citizens in several days. Therefore, from my perspective, it is vital to provide several jobless rates. The first one should include unemployed and discouraged individuals, while the number of part-time and furloughed workers should be added to the second indicator.
Graph 1 depicts a considerable contrast between the formal unemployment rate and the real one established by the media. The first one implies only people who do not have a steady workplace and are in search of appropriate vacancies. On the contrary, the second number covers a wider layer of the population, as it counts part-time, underemployed, and discouraged workers. Therefore, the latter is more likely to present the real situation with employment in the United States.
Consequences
Thus, in case discouraged citizens and part-time and furloughed workers are not estimated at all, there will not be a possibility to address the economic problems of these categories of the population. Their number should definitely be evaluated approximately in order to prevent the aggravation of the situation. The aforementioned individuals have an unsteady position in the context of their finances and lack social support. Consequently, in case of crisis and recession, they are highly likely to join the unemployed ranks.
Reference
Dolar, V. (2021). Latest jobs report shows why the unemployment rate needs fixing. The Conversation. Web.