Every now and then we can get some much needed clarity from academia. “Nowadays, the unemployment rate equals the number of unemployed persons divided by the total civilian labor force, which itself adds the number of people who are employed to the number of unemployed,” William F. Shughart II writes in the Spring issue of The Independent, a quarterly newsletter published by the Independent Institute. “To be counted as ‘unemployed,’ though, one must not have a job but also must be engaged actively in seeking one.”
“If you are out of work, but not searching for a new position, you are not ‘in’ the labor force and, hence, are a non-person as far as the unemployment rate is concerned.” Shughart is a Barnard Distinguished Professor of Economics at the University of Mississippi [1].
“The employment and unemployment statistics of the 1930s took this definition a step farther by excluding people who would not be employed in the absence of public largesse,” Shughart explains. “Someone who holds a job only because Congress has appropriated money for it is not creating wealth but is merely the recipient of an income transfer.”
“Those who derided the WPA as ‘We Piddle Around’ recognized the wasteful consequences of public profligacy.” Shughart is also a senior fellow at the Independent Institute.
“Today, however, people holding make-work positions ‘created’ by stimulus spending, jobs tax credits, or ‘investments’ in alternatives to fossil fuels and other ‘green’ initiatives are counted as employed,” Shughart observes. “If they were not, as they should not be, the unemployment rate would be much higher than 10 percent.”
Malcolm A. Kline is the Executive Director of Accuracy in Academia [2].