Are All Jobs Created Equal, and What Does the U.S. Reported Unemployment Rate Really Mean?

By: Ian Campbell | Tue, Oct 9, 2012
Print Email

By now you know that last Friday the U.S. unemployment rate was reported for September to have fallen to 7.8% in the face of a reported 114,000 net new September jobs, and net new jobs for July and August being reported as having increased by a cumulative 86,000 jobs.

On the face of things, given the oft-reported monthly U.S. net new jobs requirement of 150,000 just to keep even with the monthly U.S. population growth, the reported drop in the reported unemployment rate to 7.8% almost certainly has to be the result of more Americans ceasing in September to look for jobs.

Moreover, a very important question is: are all jobs created equal? The American overall net new jobs and unemployment numbers seem not to distinguish between part-time and full-time jobs, or provide immediate data on the average hourly wage rates of net new jobs.

A Wall Street Journal article titled Why Did the Unemployment Rate Drop suggests a 'broader U.S. unemployment rate measure was unchanged in September and held at 14.7% in September'. This broader measure, referred to as U-6 by the U.S. Labor Department, includes both the officially employed plus what are called 'marginally attached workers'. Marginally attached workers are those people who are:

Aside from all this being more than a little confusing, in the end it seems that while on the surface the 7.8% reported unemployment rate is encouraging, the water below is murky and very likely anyone who swims in it is susceptible to shark attacks.

You also might want to read New Model to Predict Unemployment Sees Rate at 8.1% that appeared in the Wall Street Journal Real Time Economics Blog on October 2. That article references a paper published in September that set out a new method for forecasting the U.S. unemployment rate which suggests the U.S. September unemployment rate was 8.1%, and that it will gradually improve to 7.1% over the course of 2013. However, the question: 'are all jobs equal?' - which of course they are not - seems not have been addressed in that paper. If interested, you can read the underlying paper titled The Ins and Outs of Forecasting Unemployment: Using labor Force Flows to Forecast the Labor Market.

Topical References: U.S. jobless rate tumbles to near four-year low, from Reuters, Lucia Mitikani, October 5, 2012 - reading time 3 minutes. Also see:



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at
* Canadian Institute of Chartered Business Valuators
** through The Ian R. Campbell Research Initiative

The full version of The Economic Straight Talk Newsletter is published each trading day. To get your Free 14-day trial subscription, visit No obligation or credit card required.

Informed Investors are Successful Investors

Comments and opinions expressed in these commentaries are those of the authors. They do not constitute individualized investment advice, are provided "as is", may change without prior notice, and are used at your own risk. The information and content provided or referenced may be incomplete, inexact, or incorrect. Your use of these commentaries is subject to the Economic Straight Talk Terms of Use and Legal Disclaimer

Copyright © 2011-2013, Stock Research DD Inc., all rights reserved

All Images, XHTML Renderings, and Source Code Copyright ©