Indeed we do. With the Fed coming out and saying (essentially) that it has abandoned the 6.5% unemployment target for raising rates, it is high time we start using a real number. As we said last week, the unemployment rate as currently calculated is little more than a propaganda tool at this point, and not even a good one.
Policy makers and the public need to know what is really going on with the employment situation. The old, garbage in, garbage out axiom applies here. If the employment data is manipulated for political reasons, how can anyone trust the data. How can anyone make a business decision in confidence?
The current measure of the labor force includes those who are employed, in addition to unemployed individuals who are currently available and actively looking for work.
To maintain unemployed status, individuals must contact employers directly, have an interview, ask friends or professional organizations about job opportunities, send out a resume or fill out an application each month.
Given the historically high number of long-term joblessness, it’s no surprise that the share of out-of-work people who aren’t considered active enough in their search has surged since the Great Recession.
This — not rising employment — is the main cause of a drop in the unemployment rate since the end of the recession.