Question

Briefly explain two problems with measuring the unemployment rate.

Answer 1

When measuring the unemployment rate, several problems like the unemployment rate may fail to account for discouraged workers. A discouraged worker is unemployed, wishes to work, searched for employment in the last year, and is eligible for work but has given up searching. Although discouraged employees are not classified as jobless, a monthly headcount of discouraged workers is maintained (Lovati, 2017). Furthermore, when measuring the unemployment rate, it might be difficult to separate part-time and full-time workers. Another issue with the official unemployment rate is that it does not consider the quality of labor performed by employees. Individuals who work part-time or on a transitory basis are considered employed.

Individuals are usually considered employed if they work in low-skilled occupations to put food on the table. A worker who has been reduced to part-time employment is still considered employed, even though the person prefers full-time work. Accurately measuring unemployment rates is complicated by imprecise information. Not all cases of unemployment are documented, and some unemployment data may be inaccurate. Since the jobless are entitled to benefits, some people may conceal their employment and still claim benefits (Keith Joseph, 2016).

 

 

 

 

 

Many jobless individuals may choose not to notify authorities, resulting in unreported unemployment.