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Interpreting Unemployment Rate

June 12, 2008 – Comments (2)

Ok, I call time out. From what I gathered last week, 2 things happened. Oil went back up to all-time highs and unemployment numbers were really high. Here's the caveat: in many ways, unemployment numbers are fud. First of all, unemployment is measured in 6 month time windows of people who are looking for jobs.

So if someone is looking for a job for 7 months, and then get it after 7 months, they are no longer part of the 'unemployment rate'. And the unemployment rate won't decrease if they do find a job.

Also, and more importantly, summer months are the slowest for hiring people. That is a fact, and something that I observed first-hand when I interned at a recruiting firm in 2004. Summer hirings crawl to a hault categorically, even in a "healthy" economy.

Now, combine this understanding of unemployment with the fact that financial woes (like increased gas prices & inflation) may cause people that have not worked for years, like houswives, to start looking for a new job, and thus fit the 'unemployed' category.  [more]

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