Unemployment Rate - Better Than Last Year

As I mentioned yesterday, the latest BLS jobs report says that the unemployment rate in June 2007 is 4.5%, better than the rate of 4.6% in June of last year.

Or is it?

If you look a little deeper at the figures, you will find that the unemployment rate only counts the people who are actively looking for a job that didn’t find one in the past month. However, it doesn’t count the marginally employed, or the jobless who:

• didn’t look for a job in the past four weeks,
• are so discouraged they have stopped looking for a job.

Actually, there are 1.5 million marginally employed workers. When they are counted, the unemployment rate becomes 5.4%, instead of 4.5%.

How does this compare to last year, when there were 130,000 more marginally employed? As you would expect, with the marginally employed included, last year's unemployment rate is 5.6% -- still worse than this year's.

What It Means to You

The unemployment rate is a lagging indicator, which means it confirms, rather than predicts, trends. Therefore, an improving unemployment rate could mean that the worsening employment picture could just be short term, in that it hasn't been confirmed yet.

The only thing to do at this point is wait until the next employment report is released on August 3 to see if the unemployment rate worsens, thus confirming the trend. In the meantime, take some of the steps in the articles below to make sure your career is protected.

Unemployment Frequently Asked Questions

• What Is Being Done to Control Unemployment?
• How Can I Protect Myself From Unemployment?
• Free About.com Career Planning Class