I probably get more questions on this one topic than any other when it’s released: The Jobs Number.
I wrote a brief explanation a while back, and many ask me to explain it again when they read the headlines from the government’s job numbers saying; “They just don’t make sense.” Well, that’s because they don’t. But understanding some of the reasons why is more important that understanding the numbers themselves.
You can read the full article here if you wish, and I’ll post the example below.
- “Let’s say there are 1000 jobs with 1 person in each. If you lay off 100 people you would have an unemployment rate of 10%. If at the next report the companies that laid off those 100 workers now states that the people are not going to be rehired because those jobs will no longer be available. (i.e.,Whether by attrition or a shuttering) You will now have a base line of 900 jobs for the next report. So by the Government’s calculation and reporting criteria the next unemployment report would show 100% or full employment because the pool of available jobs is now smaller (meaning 900 instead of 1000) and they are all currently filled.”
For the 100 people who lost their job this type of math is what infuriates them, and with good reason.
Whether one uses or dismisses the numbers is unimportant as long as one knows how and why the numbers are used in the first place. That’s a requisite for an entrepreneur.
© 2012 Mark St.Cyr