There is No Such Thing as “True Unemployment Rate”

The article, What’s the Real U.S. Unemployment Rate? We Have No Idea, provides interesting information on the process for calculating the unemployment rate.

But it also misleads in saying “real US unemployment rate.”

As Dr. Deming said: “there is no true value” of any measured process. The results depend on the process which includes the operation definitions used.

Over time the value of a measure (as a proxy measure for some condition you care to monitor) can change.

It is important to update measures to avoid using proxies that lose value.

The unemployment rate certainly has proxy issues. But there is no “true unemployment rate.” There are ways to change the process to focus on different things (make the proxy better matched to certain issues). But also it seems to me, unemployment rate needs to have other related measures that are considered in concert with the unemployment rate (such as the labor force participation rate, perhaps some measure of under-employment etc.).

Those paying much attention do use other measures in concert but the last few years I read lots of different people complaining that the unemployment rate doesn’t capture various aspects of how the job market is poor (and often claiming the unemployment rate was “inaccurate” as though there was a platonic form of the actual rate divorced from the measure process.

Related: What Do Unemployment Stats Mean? – Economic Measurement Issues Arising from Globalization – Why China’s Economic Data is Questionable