There’s an argument stating the official unemployment rate understates true unemployment because it doesn’t account for people who have simply stopped looking for work and, therefore, aren’t counted as jobless. N.C. State University economist Mike Walden considers whether this argument has merit.
“Well, there are really two parts to this argument …. . One is that there are people who don’t have a job, say they want a job, but they are not counted as unemployed because they are not actively looking for work.
The headline unemployment rate, the one that is typically quoted each month, does not include those folks. But there are other alternative unemployment rates that the government does publish — they’re out there; they’re not hidden — which does include those folks.
“So, yes that’s an issue, but it is counted if you look at the right unemployment rate.
“There’s however, I think, a second part that’s a little more serious, and that is there may be folks out there who have simply stated … they don’t even want a job because they know it’s fruitless to look for a job because there’s just not work out there. So, they’ve just sort of disappeared. They’re not even counted anywhere in the labor force, and we do think that those — the number of those people — have gone up. When you look at employment per number of people in the population, you do see that the percentage of people in that category likely has gone up.
“But some economists say, look, it’s not that big of a problem, because most of the reason for the increase in those folks – (those) who are able-bodied, could work, they simply say, ‘Hey, I don’t want a job.’ — is due to retirement.
“As the baby boom population has aged and retirements have increased, it’s thought that about two-thirds of the folks who are in that category who simply are not trying at all to get a job, don’t want a job, are due to the increasing retirements of the baby boomers.”