Question

While watching the news, the news anchor says, “Unemployment statistics released by the Department of Labor today show an increase in unemployment from 6.1 to 6.2%. This is the third month in a row where the unemployment rate has increased.” Your roommate says, “Every month there are fewer and fewer people with jobs. I don’t know how much longer the country can continue like this.”

1) Can your roommate’s statement be deduced from the unemployment rate statistic? Why or why not?

2) What information would you need to determine whether there are really fewer people with jobs?

3) Present your conclusion.

Answer 1

The unemployment rate is increased from 6.1% to 6.2%. This would mean a number of cases.

Rate of unemployment= unemployed/(unemployed+ employed)

The first case is that the number of unemployed has remained the same and the number of people in labor force has decreased ie the people have been discouraged to find jobs and hence have quit searching for one. This would reduce the size of unemployed+ employed and hence would lead to a higher rate of unemployed.

The other case could be that the unemployed have increased and this would also increase the unemployment rate.

1) The roommate's deduction is not valid as it fails to take into account both the cases.

2) For looking at the actual picture, we need to have both employed and unemployed in numbers because the case could be either the first one or second one. If it is first one, it means that people are getting discouraged and the number of people who have the job is the same, only the ones looking for it have reduced.

3) Hence without all the numbers, by mere unemployment rate, the deduction cannot be made.

(You can comment for doubts)