[jamesbressi]

No one get upset over the problematic math behind the unemployment rate.

Even when I took economics in university and we got on this topic, our professor said that it is a very flawed number for such a numerous amount of reasons, but until the government adopts a better way of substantiating, view it as nothing more than a number that may or may not help you gauge the economic climate.

In other words, there is some benefit in understanding our situation with this surveyed number, but you should always question it and the media and government will use it how they please for their own agendas.

The debate on the unemployment rate is very interesting; Google it if you have time and read up.

[RyanMcGreal]

Judging unemployment via the unemployment rate is a bit like judging your website's popularity via Alexa. The question becomes: is lousy data better or worse than no data?

[fnid]

It's not no data. There are lots of data points to use, it's the choice of exactly which data points to use that is in question. The same debate rages over inflation as well.

The issue is who is and who isn't included in the definition of unemployed. The truth is, if you don't have a job and you need one, but you've given up your search, you're still unemployed.

[sophacles]

Further how do we count people who are underemployed? For instance, software developers who take fry-cook jobs because a crappy paycheck beats no paycheck. Self-employed is tricky too, because is slow business unemployed? Sure each of these edge cases is just that, but there are enough to add up to a noticable amount.

[jeromec]

It's still a useful number as long as it's measured consistently. It may not be a verbatim reflection of worker to full employment, for example, since it doesn't count "under employed" or the people that want to work more hours, but can't. However, if we know that the 10% it represents is more than triple what we might consider normal then it can be a telling gauge.

[yummyfajitas]

It's very true that the time series Unemployment does not count involuntary part time workers. However, the time series Involuntary Part Time Workers does count people who want to work more hours but can't.

The BLS tracks both these numbers.

http://www.bls.gov/news.release/empsit.t05.htm

I think half the criticism of the unemployment number is simply because people wish one number could explain everything, but unemployment does not.

[btilly]

It's still a useful number as long as it's measured consistently.

Unfortunately it is not measured consistently over long periods of time.

[dsplittgerber]

The government in Germany some years ago messed around with the data and the data set until all appeared well and some parts of the unemployed population - apparantly mostly the long-time unemployed, who have no motivation left to ever leave the welfare benefits system to work again - were just dropped from the data set. Recognize that unemployment data is a government tool. It's one of many interesting data points for one's analysis of the economic situation, but by itself it's pretty meaningless as it's not consistently measured over time.

[Perceval]

Here's an excellent article detailing how the government over the past 40 years or so has been changing the measurements of our basic economic indicators: http://harpers.org/archive/2008/05/0082023

[RyanMcGreal]

There's still a problem: when the unemployment rate starts to fall six months or a year after it spikes, that in itself tells you nothing about whether people are exiting unemployment because they've found jobs or because they've given up looking.

[natevc2]

You could make the unemployment number get "better" by convincing people that they shouldn't try to find a job because the market is so bad.

That is why a lot of people look at the payroll report at the same time. But the payroll report usually comes with large revisions.

[yummyfajitas]

Unemployment does not tell you this, but discouraged workers does.

http://www.bls.gov/news.release/empsit.t13.htm

There are 808,000 such people (as of october), up from 484,000 in october 2008.

[fnid]

Interesting. If you look at those numbers, the amount of people who used to work more is also declining, meaning people aren't earning as much as they used to from more than one job.

[stumm]

If you include discouraged workers (ie. people who aren't looking for work) the rate is actually 17.5%. http://www.bls.gov/news.release/empsit.t12.htm

[sireat]

You are right, it is a flawed number, it does not take into account "the discouraged(people who gave up looking for work)", "the startup(ie most of YC)", prisoners(1.5% of theworking population in US) and some other groups.

However, 10.2% unemployment even by flawed definition is still significant.