Question

Jobs and Unemployment - What does unemployment mean to you? The US BLS produces many measures of the unemployment rate and we see in political arguments that one side or the other wants a specific rate used like U3 or U6. Why publish so many rates? Which one is correct? Will there ever be zero percent unemployment? Why or why not?

Answer 1

Unemployment is a condition of joblessness when a person is willing as well as able to do a work that pays an income but is currently not able to find a job that matches the skill and requirement of the person. It is true that BLS publishes U-1 to U-6 in total 6 unemployment measures in order to have a variety in the types of unemployment that the nation can have and each successive unemployment rate adds more and more people to the unemmployment pool.

U-3 is the official meausre of unemployment rate but it is U-6 that scholars suggest is more useful because it helps in meausring a more wider range of unemployed people including those who have part time jobs, discouraged workers, etc.

Unemployment rate is never zero and should/can not reach zero. The reason is that if it is zero, it implies that there is not even frictional unemployment. That would imply that workers working in one instititution will continue to work at the same place, and all new vacancies will have candidates that are new and unexperienced. This is because all experienced are already working. When all new jobs in the nation have only new and unexperienced workers, the productivity would reduce. There will be no job swtiches, no structural changes in the economy and this would seriously hamper the growth of the economy. Also, workers have desire to get a new job with more income. This indicates that there will never be zero percent unemployment, at least some market friction is required.