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May 07, 2009

Is the 'real' unemployment rate higher?

The nation's unemployment rate stands at over 8 percent, but is this rate actually too low? For example, how does the government count people who have a part-time job but who really would like a full-time job? What about people who have been out of work so long they've given up looking for a job? Who is included in that 8 percent rate?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, the two groups that we've mentioned are not included in that 8 percent rate. Technically, that rate only includes people who are out of work, who want a job and who have been actively looking for work. So people who have to settle for part-time work aren't included as unemployed. People who have given up looking for work are not included as unemployed. Now, fortunately the government does keep alternative measures that take into account the groups we've mentioned. For example, if we include those people who have given up looking for work - who legitimately are unemployed but they simply don't qualify as unemployed because they've not gone on job interviews - if we include those, the national unemployment rate as of February would be 8.5 percent rather than 8 percent. If we include those people who are working part-time, only because of the economy - they really want full-time work, but they can only find part-time work - the unemployment rate would be 14.8 percent. So, unemployment depends on who you count. You get different measures depending on what groups you include."

Posted by Dave at May 7, 2009 08:00 AM