Spike in jobless rate may be illusory

Spike in jobless rate may be illusory4 min - Sep 6, 2008Some economists are claiming that today’s announced spike in the nation’s jobless rate is illusory, caused by the government’s decision to extend unemployment benefits. The Department of Labor claimed a 5.7 percent to 6.1 percent increase in the jobless rate for August, suggesting the possibility of a recession. The government’s supplemental program extends unemployment benefits from 13 to 26 weeks. In order to get the benefits, workers must state that they are currently looking for work. Without the supplemental program, many unemployed workers might otherwise have given up on job searching. And the government does not count these so-called “marginally attached workers” as unemployed. Up to 250,000 of the new “unemployed” may be people who have given up on working, and therefore don’t count on the rolls. But the counterargument is obvious – even if these people aren’t counted as jobless due to arcane government rules, they are, in fact, jobless.