Economics Stripped



After seeing an unemployed 2008 Colgate graduate featured in a recent New York Times article on job market prospects, it is difficult for students not to worry about life – or potential paychecks – after graduation. Unemployment has become a common (albeit depressing) topic of conversation against which not even the Colgate bubble can insulate students. As politicians talk about creating jobs to remedy unemployment in the rush towards the mid-term elections, here are some stripped down facts about the unemployment situation.

Generally, the unemployed are those individuals who are out of work, but actively searching for a job. In economic terms, unemployment occurs when the supply of laborers exceeds the demand for labor. Relaxing on a couch while singing “If I Only Had a Job” typically does not constitute unemployment. This individual would not be “supplying” himself to the labor market, and thus, would not be considered a part of the labor force.

However, for those out-of-work individuals who are job-hunting, they find them­selves in good company. For the month of September, the national unemployment rate was 9.6 percent, equating to 14.8 million people. This is almost double the population of New York City and about 4,000 times the population of the little hamlet of Ham­ilton. Since the onset of the recession in 2007, unemployment rates steadily rose from around 4.6 percent to a peak of 10.1 percent in October 2009. While many economists and politicians draw parallels between the current recession and the Great Depression, the peak unemployment figures of October 2009 do not even come close to the unem­ployment peak of nearly 25 percent during the Depression era. However, when taking into account those full-time employment seekers who have abandoned the job-hunt or who have instead accepted part-time positions, the unemployment rate almost doubles, reaching 17.1 percent, as of September.

While unemployment rates are typically discussed in terms of a national average, there is great variation in unemployment rates between states. The highest territory unemploy­ment rate is 15.6 percent in Puerto Rico, but, if you are more of a ” 50 state” purist, Ne­vada comes in at a close second with an unemployment rate of 14.4 percent as of August 2010. For once, the Dakotas are notable, with the lowest national unemployment rates of 4.5 percent in South Dakota and 3.7 percent in North Dakota.

Yet, what is perhaps of greatest significance is the increasing duration of unem­ployment. According to the recent report “Issues in Labor Statistics” published by the Bureau of Labor Statistics, being out of work year-round is a reality for 31 percent of unemployed Americans. These individuals now constitute a significantly larger percent­age of the unemployed population, as compared to the figures for 2007. More pertinent to college students, the Bureau of Labor Statistic’s report also highlights college gradu­ates make up 18.7 percent of the individuals unemployed for at least a year, and 19.1 percent of the overall unemployment pool (regardless of duration). But take heart; if Elliot Spitzer is able to secure a job at CNN in these trying economic times, it appears that some sort of unqualified demand for labor must exist.