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June 04, 2010

Why are people unemployed?

This may sound like a silly question: Most people would say folks are unemployed because of the recession, so are there different categories of why people are out of work?

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

"Yes there are. ... And how these categories stack up and how they change, I think, can give us an understanding of where the job market is going.

The current reasons for people being unemployed breaks down like this: 61 percent of people lost their job; 25 percent of people had not been previously categorized as unemployed (they had really dropped out of the labor force, but now they are back in the labor force looking for work so they are categorized as unemployed); 8 percent are new to the workforce and they haven't gotten a job yet; and then 6 percent are people who quit their job.

"Now the two biggest categories are the ones really to keep your eye on: The 61 percent losing their jobs. The 25 percent who are back in the labor force. And what has been happening here ... recently is that 25 percent has been going up. That is a bigger proportion of people who are unemployed are unemployed because they have come back into the labor force looking for work. That is actually a good sign.

"And then the 61 percent has actually been getting smaller. That is, in previous months that was a lot higher number -- much higher number. That is, businesses were greater, to a greater extent firing people, if you will. So that number has gotten smaller, so that is actually good news.

"So although we are certainly not without a job problem, in terms of the categories of reasons why people are unemployed, that has been getting better."

Posted by deeshore at June 4, 2010 08:36 AM