3 ms·

The selection of this metric is not some recent political decision - the headline number has been U3 for a loooong time, and its definition was decided by the U

The selection of this metric is not some recent political decision - the headline number has been U3 for a loooong time, and its definition was decided by the UN-affiliated International Labor Organization. It's not a good measure, but it's not a case of politicians picking a convenient metric, it's just a case of a bad metric being optimized for.

bjourne 8y ago
It is essentially the only metric available that is readily comparable between countries. Also, whatever definition you use for "real unemployment rate" that rate will be linearly dependent on the U-3 metric. If the U-3 number goes up, then "real unemployment" goes up and likewise if it goes down. Those who are interested can read the report to the 13th International Conference of Labour Statisticians (yes, there are conferences for everything) in which the unemployment definition which U-3 is based on was adpoted: http://www.ilo.org/public/libdoc/ilo/1982/82B09_438_engl.pdf http://www.ilo.org/public/libdoc/ilo/1982/82B09_438_engl.pdf
- oculusthrift 8y ago
  So if i’m despondent and give up searching for a job then doesn’t U-3 unemployment go down and therefore wouldn’t using a definition that included the despondent not be linearly dependent?
  - indecisive_user 8y ago
    Though it seems hypothetically possible for what you're saying to happen, the data shows there's a linear relationship between many different definitions of unemployment throughout the years in the US. https://www.bls.gov/opub/ted/2018/u-3-unemployment-rate-was-4-1-percent-in-december-2017-u-6-was-8-1-percent.htm?view_full https://www.bls.gov/opub/ted/2018/u-3-unemployment-rate-was-...
  - a3n 8y ago
    Yes, if your job is to track that analyze it and report on it. But U3 is fine for year-to-year readings of employment temperature for lay people like most of us.
- vivekd 8y ago
  I want to add that "actual employment rate" or labor market participation rate is also a grossly misleading figure. For example America had it's highest labor market participation rate in 2000 - during the great recession. Also, Indonesia has a much higher participation rate than America and most Western countries, even though the job market there is likely not as good as Europe or America. Russia is above Germany despite the fact that any reasonable person would choose to job hunt in Germany over Russia. Unemployment does actually seem to be the better metric

bjourne 8y ago

It is essentially the only metric available that is readily comparable between countries. Also, whatever definition you use for "real unemployment rate" that rate will be linearly dependent on the U-3 metric. If the U-3 number goes up, then "real unemployment" goes up and likewise if it goes down. Those who are interested can read the report to the 13th International Conference of Labour Statisticians (yes, there are conferences for everything) in which the unemployment definition which U-3 is based on was adpoted: http://www.ilo.org/public/libdoc/ilo/1982/82B09_438_engl.pdf http://www.ilo.org/public/libdoc/ilo/1982/82B09_438_engl.pdf

oculusthrift 8y ago
So if i’m despondent and give up searching for a job then doesn’t U-3 unemployment go down and therefore wouldn’t using a definition that included the despondent not be linearly dependent?
- indecisive_user 8y ago
  Though it seems hypothetically possible for what you're saying to happen, the data shows there's a linear relationship between many different definitions of unemployment throughout the years in the US. https://www.bls.gov/opub/ted/2018/u-3-unemployment-rate-was-4-1-percent-in-december-2017-u-6-was-8-1-percent.htm?view_full https://www.bls.gov/opub/ted/2018/u-3-unemployment-rate-was-...
- a3n 8y ago
  Yes, if your job is to track that analyze it and report on it. But U3 is fine for year-to-year readings of employment temperature for lay people like most of us.
vivekd 8y ago
I want to add that "actual employment rate" or labor market participation rate is also a grossly misleading figure. For example America had it's highest labor market participation rate in 2000 - during the great recession. Also, Indonesia has a much higher participation rate than America and most Western countries, even though the job market there is likely not as good as Europe or America. Russia is above Germany despite the fact that any reasonable person would choose to job hunt in Germany over Russia. Unemployment does actually seem to be the better metric