Economics for One

Putting the Lie to the Unemployment Rate

January’s unemployment numbers made it painfully obvious that the government’s unemployment calculations are a mess.

In case you missed it: the January unemployment number came in at 9.0%, which is a decrease of 0.4% from December’s 9.4%.  But the other interesting statistic in January was the net number of new jobs: 36,000.

Now, if 36,000 new jobs can lower the unemployment rate from 9.4% to 9.0%, then 810,000 jobs should eliminate unemployment altogether.  And conversely, a loss of 8,190,000 jobs would make everyone in the US unemployed.  Put another way, it suggests there are a total of 9,000,000 eligible workers in the United States.

But here’s the problem: there are something like 140 million employed people in the US.  And if that’s the case, then it should take closer to 560,000 jobs to swing the unemployment rate by 0.4%.

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