Last month, after a particularly benign 9.5% unemployment reading, several pundits backed off predictions of 10% unemployment. Now after today’s 9.7% number, that’s back on, and everyone assumes the rate will eventually zoom right over that benchmark.
But as we said last month, it doesn’t matter. First, there’s the obvious reason: The number has flaws, namely that it is susceptible to changes in the workforce — who’s looking for a job, who’s still collecting unemployment benefits, etc. Some folks like to use the “real unemployment” rate (which includes the undermployed, and discouraged workers) which is closer to 16%.
But that’s not the real reason why it doesn’t matter. All these numbers are just proxies economists use to answer one, single question: Can people who want to work find work? When they can find work, the economy is considered to be doing well, and when the able-bodies can’t find work — namely, they can’t find anyone who finds their labour worth paying for — then that’s a problem.
10%, like any other round number, is not particularly important. What we want to see is some evidence that people who formerly couldn’t find work actually can. So far there’s a few slim green shoots, like online job postings, but the majority of the evidence suggests it’s still a huge and growing problem.