Student Questions: The Unemployment Outlook

BY busadmin  November 5, 2009 at 10:33 AM EDT

job board; file photo

Editor’s note: This week and next, the Business Desk will feature questions from students in three high schools around the country.

Question: Unemployment seems to be far worse than the government’s statistics show (currently just below 10 percent). Why is this so? — Liz, senior, Central High School, Phoenix, Ariz.

Paul Solman: Because lots of people who you (and I) might consider “unemployed” aren’t in the most commonly reported number, which only includes people who haven’t worked at all, or looked for work, in the past week. And even that number is from a sample that might misrepresent reality, if unemployed people are harder to find and survey than other Americans.

But assume the methods are sound. The government actually reports an official statistic called “Unemployment-6” that includes everyone who has looked for work in the past year (but not past week) and who is looking for full-time work, but can’t find, and thus worked part-time in the past week. “U-6” was 17 percent last month. And even that number didn’t include anyone who hadn’t looked for work in the past YEAR, because they were simply discouraged. Add in those people, and the unemployment number could be double the 10 percent you mention.

Question: Is unemployment going to get worse or better? — Miguel, senior, Central High School, Phoenix, Ariz.

Paul Solman: If you believe most economic forecasts, it’ll get worse right through the middle of next year. I can’t see any reason to argue strongly the other way. Since economies like ours tend to move up and down in cycles, I assume unemployment will get better some day.