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Sunday, October 11, 2009

What's the Real Unemployment Rate?

I saw an economist make a very interesting criticism of the "official" unemployment rate.

Suppose that the "official" unemployment rate is 10%. Suppose that 50% or more of all workers are employed by the State, directly or indirectly.

The people employed by the State shouldn't count when calculating the unemployment statistics. State workers usually do zero useful work or negative work or way-overpriced work, and shouldn't count.

For example, suppose there are 10M unemployed workers, 40M non-State workers, and 50M State workers.

Using the above numbers, the "official" unemployment rate is 10%. However, the real unemployment rate rate is 20%. If you don't work for the State, your odds of being unemployed are 20%!

This doesn't include indirect State employees like lawyers, people working for the electricity/telephone monopoly, etc. If you include indirect State employees, then the calculation is even more unfavorable.

That's an interesting perspective. When calculating the unemployment rate, people who work for the State should be excluded.

1 comment:

Anonymous said...

In the UK, I heard on the news that 50% of the country's wealth goes to the State. The current government has increased state employees and spending.

Once when there was a mini-recession (not the current one) I was unemployed for a while and eventually the unemployment office suggested I apply for a job working in an unemployment office!

One reason I couldn't get a technical job at the time was that:

a) Recruiters don't like people that have been unemployed for more than a few months.

b) Recruiters tend to only look at your last job and only put you forward for a job if your last job exactly matches the current job on offer. They wouldn't dream of actually reading your whole resume or assuming that you could possibly pick up a few new things or rather a different slant on the same concepts you have always used time and time before.

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