I’ve been reading a lot of optimistic news about the future of the economy lately. And, I count myself as one of those who are pretty optimistic. One of the measures of optimism that economists track is hiring plans. The more businesses who plan to add employees the more bullish businesses are seen about economic prospects.
As one of those bullish employers, I watch the “unemployment rate” carefully because it helps me understand how easy, or hard, it’s going to be to find help. It also gives me insight into how much employees are going to cost.
As I’ve contemplated all of this recently, I’ve been a bit perplexed. The “unemployment rate” both locally and nationally is improving. That is it is falling, but I’ve noticed that we are receiving more responses to our advertising for new employees. That’s counter to what I expected. Why?
I think part of the answer lies in lies. You see there are multiple “unemployment rates.” The rate that is always published in the press and talked about by commentators is the “U-3” rate, but that statistic only counts people who have looked for a job in the last four weeks. Currently, the national U-3 rate is about 5% (considered “full employment”). There are other rates of unemployment, and they are a lot higher. The “U-6” rate includes part time workers who want full time jobs, discouraged workers who have given up looking altogether. That rate, at the end of the year, was close to 10%.
This “real rate” of unemployment is probably the one we employers looking to hire should be focusing on as it’s the rate of people who are available for full time employment. What the current rate tells me is that there are a lot of people out there who need and want jobs. It tells me the job market, though improving, is still pretty soft. It squares with my current experience. Check out the U-6 rate easily found on the internet. I think tracking it will give you more insight into how many people are looking for work when you are hiring. I hope you are hiring – because that means you’re growing!