Thursday, February 10, 2011

Unemployment Rate is Understated Versus 2000 Participation Rate



This graph illustrates the unemployment rate over time. If we hold the participation rate (percent of population in the labor force) equal to its peak at 2000, the unemployment rate would 4.7% higher. That is equal to 6.7 million more unemployed workers. Many are from the construction industry which is suffering from the bursting of the real estate bubble and are out of the labor force.

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