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Former Bush Adviser Lazear: It's the Employment Rate, Not the Unemployment Rate

By    |   Thursday, 06 June 2013 04:25 PM

As financial markets await Friday's jobs data, our preoccupation with the unemployment rate is misplaced, says Edward Lazear, chairman of former President George W. Bush's Council of Economic Advisers.

"Instead, the Fed and the rest of us should be watching the employment rate," he writes in The Wall Street Journal.

Lazear cites two reasons. "First, the better measure of a strong labor market is the proportion of the population that is working, not the proportion that isn't."

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And that proportion has plunged to 58.6 percent from 63.4 percent in 2006. The number has barely improved from its post-recession low of 58.2 percent in July 2011.

"By this measure, the labor market's health has barely changed over the past three years," Lazear says.

Second, the unemployment rate, 7.5 percent in April, counts only people who are actively seeking work and are jobless.

The rate would be much higher if it included people who have given up looking for a job and those who are working part-time because they can't find full-time work.

"At the present slow pace of job growth, it will require more than a decade to get back to full employment defined by pre-recession standards," Lazear writes.

Not everyone views the glass as half-empty.

“There’s some modest hiring taking place,” Millan Mulraine, director of U.S. rates research at TD Securities, told Bloomberg. “Confidence is pointing to a fairly robust rebound in consumer activity.”

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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As financial markets await Friday's jobs data, our preoccupation with the unemployment rate is misplaced, says Edward Lazear, chairman of former President George W. Bush's Council of Economic Advisers.
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2013-25-06
Thursday, 06 June 2013 04:25 PM
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