3.5% of the working-age population has left the labor force since the start of the Great Recession. Should those people be also counted as unemployed? If so, here is what the unemployment rate trend would look like:
It’s not clear however if the orange line above represents “true” unemployment. For example teenagers had far greater employment opportunities in the 90s than they do now, with youth labor force participation having declined sharply over the past decade. But should a 17 year-old who lives with her parents and can’t find part-time work be classified as “unemployed”? Evidence suggests that a great number of the labor force “dropouts” were in the 16-19 age group. This would indicate that the “effective unemployment” rate (depending how one defines “unemployed” is somewhere between the orange and the blue charts above.
Adapted chosen excerpts by Job Market Monitor. Read the whole story at