Platt Perspective on Business and Technology

Bringing the job market and marketplace into focus – Part 3.5: a response to an emailed comment re Part 3 and preceding

Posted in job search and career development by Timothy Platt on August 12, 2010

I have been running a series in my Guide to Effective Job Search and Career Development on our current economic climate and on searching for a new career path forward in a time of profound change (see postings 89 through 91 for Parts 1, 2 and 3 in the Guide). Consistent with that I recently posted a note to an online discussion group that I participate in, in which I stated in part:

“The official Labor Department figure for our current unemployment rate in the United States persists at approximately 9.5% and if you take a less stringent and more accurate number and include all who have exhausted their unemployment benefits but who are still looking the number comes to some 16.4%. These specific numbers are for the United States but our current and ongoing economic downturn reaches beyond any single nation’s borders in its impact.”

I just received a comment/reply by email from a colleague who noted:

“What is your real sense about the 16.4% – is there some statistical chicanery in this number? Listening to my networks I get the sense that the number is in the 20% range maybe even 25%.”

I found myself thinking about the unemployment rate numbers and what they mean as I cited them in my blog series and in this online group posting, so this reply came at an appropriate time and with a very important focus. I will post in continuation from Part 3 tomorrow, as initially planned and as a follow-through from where Part 3 finished, but I decided to add in a Part 3.5 first to address at least some of the questions raised by these numbers, and what they do and do not mean.

First of all, a more accurate representation would be a range with a statistical measure included to indicate likelihood that a real, empirically valid value would fall within that range. Data collection and analysis is not 100% precise even for tabulating an “official unemployment rate” that is based on numbers of recipients of unemployment benefits, and quantities that should be precisely known such as the total numbers of checks cut and sent out. Precise values become a lot more uncertain when estimates are included as to numbers of people who have fallen out of direct view to organizations such as the US Department of Labor by virtue of their no longer receiving benefits, as these unemployed are no longer in direct contact. I will add that there are also categorical and definition issues here as well. Should you only include people who are completely out of work and who have no income coming in after exhausting their unemployment benefits or should you also include people who are employed, but underemployed and not bringing in enough income to meet current needs?

But for the moment lets assume that you somehow arrive at precise and completely accurate single value determinations for these unemployment numbers – numbers of individuals who are still looking and who have not exhausted benefits, and numbers who are looking including all who are making insufficient current income to meet current, ongoing expenses but who have exhausted all of their unemployment benefits. Here, I note that the 16.4% figure I cited above does not generally include underemployed – only fully unemployed, so I have widened the definition for that second number here. But that detail aside let’s assume these numbers were solid and established. What do they mean?

Most labor statistics of this general type that we see are national averages cutting across all industries, job types, and candidate demographics. Even if these numbers are completely accurate national averages, they can still be way off for specific geographic regions or for specific locals, or for specific demographics that you might wish to more fully track based on age, educational attainment, work experience level or other characteristics that might be collected. In fact as national averages, these numbers are in effect by definition going to be at least somewhat off for any subset of the jobs market that you might separately consider.

Some demographics groups in some parts of the country, looking for specific types of jobs in specific industries are doing better than average, but many are doing worse and even a lot worse. Consider regions of the country that have lost major employers and consider the ripple effect that has on employment in entire communities. And with so many people unemployed, the less educated and less experienced among them find themselves competing for work that would normally be available to them, against candidates with much more education and experience. Some demographics are facing a significantly higher unemployment rate than these numbers would indicate.

Unemployment numbers are as such, primarily soft number indicators and more value may be found in how they change with time than in any precise values indicated at any one time. Trends, however, have their own limitations. So for example, when employment is starting to improve and businesses start hiring at higher levels that might be indicated by an apparent increase in a key unemployment number as more people who had given up start looking again and move back into visibility for the agencies that collect unemployment numbers. This is certainly true where measures that would go into that 16.4% number are considered with people who have exhausted benefits who are less easily identified and tracked.

I do not know the actual number for unemployment and certainly if the crucially underemployed are counted, who need a more full time position and income to meet basic needs. I am not sure anyone really does and certainly with seasonal and short-term employment further clouding the picture. That said, I still see these numbers useful as published as general indicators, and the general indication is clear – significant ongoing unemployment and workplace crisis for many. And that is where this Guide to Effective Job Search and Career Development and the series I post within it come from.

Tomorrow, as stated above, I will post Part 4 to Bringing the Job Market and Marketplace into Focus and will focus on developing a clear and complete inventory of the skills, experience and qualities that you would bring to a new job in a new career path.

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