Question

Donald Trump, 8/7/16, speech to the Detroit Economic Club

The U.S. unemployment rate is a foundational economic indicator, widely cited by the media, economists, and politicians as a barometer on how the economy is performing. The rate is the product of more than a century of evolution and Democrats, Republicans, socialists, libertarians, union officials, and corporate C.E.O.s had largely agreed upon its calculation. But since the last Presidential election, this statistic has come into question as shown in the above sample quotes. Do these assertions have any merit?

To investigate these claims, write a TYPED paper of no more than 250 words with respect to the following:

• How is the current U.S. unemployment rate calculated

• What are come of the shortcomings of the unemployment rate? Do you think it does a good job of measuring the unemployment situation in the United States

• Review the claims made by President Trump and the news media regarding the unemployment rate. Do you feel these claims have any merit? If so, why? If not, why not?

As part of your paper, cite at least two sources you are using for your answers and opinion. Follow the following example as a guide for formatting these citations.

first, read a background article at CNN Business entitled “America is too focused on the unemployment rate. Here's what we need to be looking at” by Gad Levanon, Chief North American economist at The Conference Board, a 501 non-profit business membership and research group organization.

PLEASE ANSWER THE BOLDED THREE QUESTIONs based on this information. Thank You.

Answer 1

Unemployment Rate Calculated in U.S

The unemployment is an important indicator the federal reserve uses to determine the health of the economy when setting monetary policy. It is also used to look at which sectors are losinv jobs faster. The CPS and CES are two surveys that the U.S Bureau of Labor Statistics uses to determine the unemployment rate for households, businesses, and government agencies.

(1) CPS (Current Population Survey) :- It is also known as the household survey. The CPS is conducted based on a sample of 60000 households. The survey measures the unemployment rate based on the ILO definition.

(2) CES (Current Employment Statistics Survey):- It is also known as the payroll survey. The CES is conducted based on a sample of 160000 businesses and government agencies that represent 400000 individual employees.

The U.S uses six measurements when calculating the unemployment rate. The measures range from U1 - U6. They calculate different aspects of unemployment. They are:-

U6: All of U5, plus total employed part time for economic reasons.

U5: All of U4, plus marginally attached workers.

U4: All of U3, plus discouraged workers.

U3: Unemployment rate.

U2: Unemployment rate - job lossers

U1: Percent of Civilian Labor Force Unemployed 15 weeks and over.

Shortcomings of the unemployment rate

Unemployment is not an absolute calculation and it is prone to errors and biases related to data assembly and inconsistencies in reporting. For example, the unemployment rate does not take into account individuals who are not actively seeking employment, such as individuals attending colleges or even individuals who are in U.S prisons. Individuals who are self- employed, those who were forced to take early retirement, those with disability pensions who would like to work part time and seek full-time employment are not factored into the unemployment rate.

By not including all underemployed or unemployed individuals in the measurement of the unemployment rate, the calculation does not provide an accurate assessment of how unemployment truly impacts society. Errors and biases are also present due to data assembly and reporting inconsistencies.