Statisticians And Unemployment Analysis

Statisticians determine the unemployment rate in the United States by dividing the number of people in the labor force by the number of unemployed (Rittenberg & Tregarthen, 2009, p.511). Moreover, the Bureau of Labor Statistics counts an individual as unemployed if they are currently without employment yet are seeking work (Rittenberg & Tregarthen, 2009, p.511). Combining the total number of people working with those that are unemployed reveals the number in the labor force (Rittenberg & Tregarthen, 2009, p.511). Hence, in order to determine the unemployment rate for our hypothetical economy we divide the number of unemployed, 10,000 by the number of people in the labor force, 100,000. Performing the calculation demonstrates an unemployment rate of 10%. …show more content…
Furthermore, as the labor force is the sum of the number of people working and those who are unemployed, the labor force would decline from 100,000 to 96,000. Calculating an unemployment rate base on our new numbers of 6,000 unemployed and 96,000 in the labor force provides us with an unemployment rate of 0.0625 or 6%. Although this statistic demonstrates a decline in the unemployment rate, economists would interpret this as bad news for the economy as this infers a long-term stagnation or decline in economic growth. Furthermore, those discouraged workers are not contributing to the economic output and have shifted from being contributing taxpayers to living off the government