The Labor Department's "Mud Pie" Unemployment Rate

By:  Ralph R. Reiland
10/15/2012
       
The Labor Department's "Mud Pie" Unemployment Rate

The funny thing about the Labor Department’s monthly unemployment report is that the number-crunching bureaucrats act like they’re delivering high-carat diamonds when the real worth of what they’re reporting is closer to the value of a mud pie. Consider: A college graduate with a degree in biomedical engineering who gets a $90,000 job in his field is counted exactly the same in the government’s unemployment report as a biomedical engineering graduate who can’t find a job and is working weekends as a bus boy at Applebee’s.

The funny thing about the Labor Department’s monthly unemployment report is that the number-crunching bureaucrats act like they’re delivering high-carat diamonds when the real worth of what they’re reporting is closer to the value of a mud pie.

First, a college graduate with a degree in biomedical engineering who gets a $90,000 job in his field is counted exactly the same in the government’s unemployment report as a biomedical engineering graduate who can’t find a job and is working weekends as a bus boy at Applebee’s.

Or as the PBS Newshour succinctly stated it, “If you only worked one hour in the past week, you’re counted as officially employed.”

Given the large number of part-timers who are currently looking for full-time work and unable to find a job, that flaw alone by the Labor Department of putting part-timers in the “employed” column makes their monthly unemployment statistic meaningless.

An estimated 50 percent of young college graduates are currently either jobless or significantly underemployed in positions that don’t utilize their skills and education.

Second, if a guy loses his $150,000 job and he and his previously stay-at-home wife each get part-time jobs paying $25,000, the Labor Department counts that as job growth, two jobs rather than one, a clear indication that job creation is expanding.

If they can’t make ends meet, there’s even more job growth if their kid gets a Saturday job drying cars at the local car wash.

Click here to read the entire article.

Ralph R. Reiland (photo) is an associate professor of economics and the B. Kenneth Simon professor of free enterprise at Robert Morris University in Pittsburgh.

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