Over the past several years, it seems we have been constantly reminded of fluctuation in both the national and Michigan unemployment rates. Whether its in the form of a television broadcast or a newspaper headline, the concern of widespread unemployment has been dominating. Were at a time where Michigans economy continues to gain steam, which means understanding these numbers and how they affect local workers is crucial.
Beginning in January 2009, with the community feeling the brunt of the recession, Lansings unemployment rate maintained primarily at double-digit numbers until July 2010. Michigans overall number teetered in the double-digit numbers during that period too, with a high of 14.2 percent in August of 2009.
The most recent numbers appear to be much more encouraging to both job seekers and employers, with the current Michigan rate at 7.2 percent – the lowest rate in six years. Lansings local outlook is even brighter, with the September 2014 preliminary numbers placing the area rate at 5.2 percent.
With these numbers being so vital to Michigans economy and our workforce, the question still remains – what group of people make up this number and how is this personal information collected?
Theres frequently confusion on who the unemployment rate figures actually represent. The process of calculating the monthly unemployment rate, released by the US Bureau of Labor Statistics on the first Friday of every month, begins by surveying large samples of both households and employers. Because counting each unemployed person in the nation every month would be nearly impossible, the Census Bureau surveys about 60,000 households chosen to represent the general US population. They are asked questions strictly based on employment. The Bureau of Labor Statistics then gathers information from a representative sample of employers, comparing month-to-month employees on payroll.
From there, they calculate the amount of workers who are considered to be actively seeking work. For example, this means job seekers must be engaging in activities such as contacting potential employers, creating and sending resumes, visiting employment agencies and setting up job interviews. These are the people who are considered able-to-work and are part of the labor force. People who are not considered to be part of the labor force can range from full-time students to retirees.
The unemployment rate calculation does not factor in those who have temporarily or permanently dropped out of the labor force – more simply, those who are not actively seeking jobs. The rate also doesnt take into account people who are employed but are not employed to their full potential. This could include people who are seeking full-time employment and are working part-time jobs, workers who lack applicable skills and schooling to get a job and have given up the search and people who are working at a level below their educational standard.
The real unemployment rate, a figure different from the standard unemployment rate, takes these circumstances into consideration when calculating. The real rate has also dropped considerably since effects of the recession began to hit.
While some people have criticized the standard unemployment rate as being too broad and too inclusive, its purpose extends beyond face value. Why does it matter? The unemployment rate is not only a portrayal of the healthiness of an economy, but how people are able to act financially.
A loss or lack of wage for a worker inhibits both individuals and their families from using their purchasing power, affecting both the stimulation in Lansings local economy and the national economy. A low unemployment rate equates to people having the ability to spend money, ultimately benefiting our economy. A decrease in the unemployment rate can help motivate workers to actively seek work and encourage companies to stay and grow in Michigan. The rate also represents strength and is a symbol of progress.
Living in this time, almost every one of us has felt the full effects of the recession. We have seen the toll it has taken on co-workers, friends and neighbors. With our unemployment rates on the decline, Michigans labor force is beginning to find its footing once again – reflective of the many strides were taking toward building a prosperous economy.