Question

8.8 Counting the unemployed? We could measure the extent of unemployment by a count (the number of people who are unemployed) or by a rate (the percentage of the labor force that is unemployed). The number of people in the labor force grew from 115 million in June 1985, to 132 million in June 1995, to 149 million in June 2005, to 157 million in June 2015. Use these facts to explain why the count of unemployed people is not a valid measure of the extent of unemployment.

Answer 1

The number of unemployed people is not a good measure of unemployment, rather we should look into percentage of people who are unemployed.

The number of unemployed people is maximum in 2015.

Say, the number of people in 1985 was 500 million and the number of people in 2015 is 800 million.

So, the unemployment rate is 1985 was = 115/500 = 0.23 = 23%. The unemployment rate in 2015 is = 157/700 = 0.20 = 20%.

So, the although the total number of unemployed people increases from 1985 to 2014, it is likely that the total population also increases and the unemployment rate has changed.