Unemployment stats are great if you’re an old white man.
Unemployment rates often provides a biased view of the labour force and often misrepresent the experience of youth, women and visible minorities (Lovati, Federal Reserve)
We’ve heard a lot about unemployment numbers across the world in the recent economic troubles. I think people like to write about them in the papers because they seem to be basically objective and make sense to most people. More meaningful than many more abstract and complicated economic indicators. However, there are some problems.
Tim Harford explains it well from a UK point of view – he discusses how the unemployment rate in the UK is currently at 7.7 percent – but that the economic inactivity rate is three times as high. So for every person looking for a job who doesn’t have one, there are three people who are not longer looking for work. And these are people between the ages of 16 and 64. “Creating jobs is not the same thing as making people feel secure in their jobs – not the same thing at all.”
In Canada, the unemployment rate fell in September. It is now below 7% for the first time since December 2008. (http://www.thestar.com/business/economy/2013/10/11/canadas_unemployment_rate_falls_as_fewer_young_people_seek_jobs.html) This looks like the economy created 12,000 jobs. But if you dig deeper into the change in the rate you will see that the reason the rate dropped is that more than 21,000 people between the ages of 15 and 24 dropped out of the labour market. And the unemployment rate reported at 6.9% has already been seasonally adjusted – in other words, economists have already adjusted for the fact that it’s back to school season.
“There’s a phenomenon called ‘scarring’ which occurs when young people are not able find work they get older they haven’t built up that experience they haven’t built up those connections and it really does hurt their lifetime employability,” he said. (He is Sean Geobey, a doctoral candidate in social and environmental finance at the University of Waterloo)
If you’re going to look at economic indicators there may be better ones than the overall unemployment rate, specifically as it’s collected and reported currently. Amount of savings, eligibility for unemployment payments, use of government transfers for food