Unemploymet Rates are not Reliable Idicator of Economic Strength

Source: http://www.cbc.ca/news/business/moneytalks/2011/02/michael-hlinka-dont-fixate-on-unemployment-the-numbers-mean-little.html

Summary:

The article talks about how citizens have their time where there are different expectations that exist that guides you to what you choose. Every year the unemployment should be different and unpredictable. The unemployment rate in January raised to 7.8%, of course in ratio terms it looks quite small but in the actual population number it is quite immense. To a few people it just doesn’t makes sense because around 69 thousand new jobs were created the last month, so how did unemployment rates raise? Micheal explains that there are more people who joined the labour force and started to look for jobs actively. An example of the fixated percentages being unconfident representation is Alberta. Alberta’s economy is the strongest compared to the other provinces yet it has the highest fluctuating unemployment rate. Overall these percentages are not what people should be looking at because it is not a very good indicator of economic strength.

Connections:

This article is connected to many topics that we have learned in our economics 12 class especially unemployment rates. A few classes we discussed the unreliability of unemployment figures of how it is not accurate and how it is only a rough estimation. To understand how the unemployment number works we first have to take in consideration that the age prospected to be in the work force is 15-65 also the amount of surveys conducted. First off the unemployment rates are unreliable because of varied people participating in the work force and second the amount surveyed is usually around 1000 people to represent all of Canada. To be considered unemployed you would have to be looking for a job, that means if a person has lost hope and gave up trying to search for a job they are not counted towards the labour force. There are also a few types of unemployment such as seasonality, frictional, structural and demand deficent which all four varies at different times. The elements mentioned above also relate towards another topic that we have covered which was economic strength. Since the unreliability of unemployment seems to be facts than it concludes how economic strength is not determined by unemployment rates.

Reflection:

I completely agree with the article about how the unemployment rate is a unreliable indicator of the condition of our economy. It takes many regulated requirements to be considered unemployed for example if people have given up on looking for a job or being a student they are not considered unemployed. Determining the economic strength of a country is difficult because you can never truly reflect accurate information. An example is that we know that Alberta is strong because of their oil production sales but their unemployment rates are varied immensely. You would think that a province being well developed would have low unemployment rates but it’s a factor that is unreliable leaving economic strength to be contradictory. How do we determine economic strength? We can determine economic strength by changing the regulations upon measurements of economic factors such as unemployment, expenditures, consumption, sales and etc.