INTRODUCTION
It is true that each month, the Labor statistics Bureau releases flooding data on employment and other labor statistics in the USA and each month the main focus remains centered on the unemployment rate. However, it should be noted that the unemployment rate is just one of the many indicators. Looking at the economic growth of the lens of just one measure; the unemployment rate is not justified. Moreover, being out of work does not every time imply that a person is unemployed. There are other reasons for the temporary layoff, people available for work, and people looking for work as well. There are five other measures which the bureau calls as the labor underutilization measures other than the unemployment rate. Then there is also the context of frequently occurring hurricanes and storms which make people unavailable or unreachable to be employed as well. The statistics of labor department have to be seen from this perspective as well. Moreover, it is also witnessed that even if the economy gets struck by the consequences of hurricanes, the overall trend has remained towards upward. The hurricanes are considered a major factor in affecting the organization’s employment statistics, but after it has passed, the economy works faster to redeem its lost position.
BACKGROUND STORY
It is a normal practice for everyone to look at the health of an economy from its unemployment rate. It is not entirely wrong. However, there is so much more going on under the umbrella of an unemployment rate that taking your eyes off from its underlying facts may cause us to ignore some of the major facts of the labor market. The unemployment rate is just one measure which shows how the US economy is working and it is not one of the best one always to consider it as a standard. Simply not working does not necessarily imply that the person is unemployed. The person should be firstly available for work, and secondly, he or she should be looking for work as well. The unemployment rate does not provide information on these aspects. The unemployment rate does not consider how many people have found the job or how many have lost jobs. The rise and fall in this measure only account for the people joining or leaving the active force (Desilver).
From its beginning when the US economists started to measure the unemployment rate of US, they have struggled with defining exactly what unemployed means. As there are also those parts of the population like the students, retirees, etc. who may not be looking to have a paid job. Thus, defining employment is way easier than defining unemployment. Since 1945, fulfilling the definition of unemployed means one has to be eligible on two grounds. Firstly, he or she should be available for work, which means they should not be sick or something. Secondly, they should be looking for work in the past four weeks. Thus, this shows that a person who is not employed does not necessarily mean he is unemployed as well. This part of the population, which is not available or not looking for work is not considered a part of the active labor force. Understanding this fact affects how one perceives the meaning of unemployment rate, and consequently to some extent the understanding of US economy as well.
Then there is another part of this discussion which focuses on the effect of the hurricanes on the labor statistics. At the end of 2017, US reported having lost almost 33000 jobs when its unemployment rate dipped to 4.2%. After the impact of the hurricanes that hit Florida, Texas and Puerto Rico (Jackson), the economy lost 33,000 jobs in September. The rise has been increasing ever since (Mutikani and Lucia). However, the economists did not think it is some serious indicator. They considered it as a blip in the labor market, which was going very strong. This news came with the good news of the decline in the unemployment rate to 4.2 percent. Economists believe that hurricanes have caused the numbers to be unpredictable. However, it will stabilize. The loss of jobs is not troublesome for the economists, because learning from their experience with the Katrina hurricane; there is an upsurge in the hiring process in the subsequent months of a hurricane.
ANALYSIS
Specifically, there are five other measures used by the Bureau of Labor which they call as the labor underutilization measures. These include the labor participation rate, average weekly wages, employment-population ratios, average hours worked, etc. The Bureau of the Labor derives its data from the Census Bureau which interviews around 60,000 individuals each month. The CPS has to cover the entire population of non-institutionalized civilians aged 16 and over including all self-employed people. The prison inmates, home for aged, residents of mental facilities, and armed personnel’s (military) are excluded from their coverage area. There have been no major changes in the measurement practice of unemployment rate since 1994. However, there have been some updates.
Desilver, Drew. A different view of employment and unemployment. Digital Image. Power Search. Power Search, 7 March 2017. Web. 21 April 2018.
As pointed out in the introductory part, the unemployment measure leaves out some part of the population. The underemployed, the workers who would prefer to work full-time but are currently part-time employed are also considered employed. Then the discouraged workers who are not looking for work because they have long left doing it because no positive results are not considered part of the active labor force. The BLS collects information on many other measures as well. These include the six underutilization measures, including the unemployment rate labeled as U1 to U6 of which U3 is the unemployment rate. From these, the broadest measure is U6 which incorporates all of the marginally attached workers, including the left-out ones mentioned earlier. This rate has been 9.4% in January 2017. The U6 rate has typically remained 3% to 7% higher than the normally used unemployment rate. Another key metric is the job participation rate, which was at its highest in the early 2000s at 67.3% and was at 62.9% in January 2017.
It shows that many underlying factors are going on behind the rate. Considering it without the context can never help predict the right situation. Moreover, it can mislead. It is also visible in the situation in the lost jobs figure reported after the hurricane hit Texas, Florida and Puerto Rico. Many companies reported that they had held their hiring process because workers who were typically in the field are unable or unavailable to work. Then many manufacturing plants were shut down because of the damage which is reported in the survey as well. There were huge effects of the hurricane on the job market, like 1.5 million workers (White) after Harvey and Irma did not work because of weather. However, this does not show the real picture of the economy even if it is growing unevenly. The hourly wage rate has increased, employers are looking to retain their employees by offering higher packages and compensations, businesses are working on developing their worker’s skills and shortening the interview cycle to get to the workers first (Cohen).
CONCLUSION
It is important to remember that the figures do not necessarily show the whole picture. The unemployment rate does not account for many other sections of the society which are to be included in the measurement as well. Thus, for better understanding any statistic, it is necessary to comprehend its actual meaning by looking at how it is measured and what it is measuring.
Work Cited
Cohen, Patricia. “U.S. Lost 33,000 Jobs in September; Unemployment Rate Dips to 4.2%.” The New York Times. The New York Times, 6 October 2017. Web.19 April 2018. https://www.nytimes.com/2017/10/06/business/economy/jobs-report-unemployment.html.
Desilver, Drew. “What the unemployment rate does – and doesn’t – say about the economy.” Power Search. Power Search, 7 March 2017. Web. 21 April 2018. http://www.pewresearch.org/fact-tank/2017/03/07/employment-vs-unemployment-different-stories-from-the-jobs-numbers/.
Jackson, Jhoni. “Puerto Rico’s Recovery Efforts Continue a Half Year After Hurricane Maria.” Teen Vogue. Teen Vogue, 16 April 2018. Web. 21 April 2018. https://www.teenvogue.com/story/puerto-rico-recovery-efforts-continue-hurricane-maria-months-later.
Mutikani, Lucia and Andrea Ricci Lucia. “U.S. jobless claims rise; continuing claims lowest since 1973.” Reuters. Reuters, 5 April 2018. Web. 21 April 2019. https://www.reuters.com/article/us-usa-economy-unemployment/u-s-jobless-claims-rise-continuing-claims-lowest-since-1973-idUSKCN1HC1JC?il=0.
White, Gillian B. “Hurricanes Irma and Harvey Spur the First Employment Decline in 7 Years.” The Atlantic. The Atlantic, 6 October 2017. Web. 21 April 2018. https://www.theatlantic.com/business/archive/2017/10/september-jobs-loss/542274/.
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