NEW YORK - The big headline number is that jobless rate increased to 9.8% and that the new number is one of the highest since the recession began. However what is not said is that the unemployment rate is a flawed statistic used to measure unemployment which often breaks down in times of recession. The unemployment rate is calculated by unemployed individuals divided by the amount of people in the labor force. This is confusing because what is a unemployed person and what is a labor force?
The labor force is people over the age of 16 who have a job or are looking for work. And an unemployed person is someone looking for work. So if someone is 40 but they are not looking for work then they would not be included be in the labor statistic. In times of recession many people do not look for work and thus the unemployment rate can drop as the economy gets worse and it can increase when the economy improves.
The U.S. economy still has 15 million people unemployed. It could take years before the economy resumes to normal. The Social Security Administration estimates the U.S. will need to add 200,000 jobs a month to push unemployment below 8 percent by 2012.
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