By Reid Tileston '15
As many of you know from your economics classes, and as V. Duane Rath Professor of Economics, Erik Hurst, who teaches Macroeconomics, pointed out in a recent lecture, the US unemployment rate is calculated using the number of people not working but who are looking to work divided by the labor force. The labor force is defined as the number of people looking for work (labor force participation is the US is currently 62.7%). So if you are not actively looking for work you are not counted as unemployed. In case you were wondering about your own status in the US unemployment rate, even though some of us are looking for jobs currently, we are not counted as unemployed because in the eyes of the Bureau of Labor Statistics students are classified as being out of the labor force.
During a recent conversation with career services it came to my attention that the full time employment report numbers are calculated the same way. For example, in 2013, 56 (9.7%) full-time students graduated with the status of not seeking employment. The same report notes that the class of 2013 had a 93.7% job placement rate within 3-months of graduation. The job placement rate is calculated only out of those that are looking for a job. This calculation methodology is standard across business schools and graduate schools. Who represents the 56 people who came to business school but are not looking for a job. We all came here for careers right?
I know a 2014 graduate (chooses to remain anonymous) who was defined as not looking for a job in the employment report. His response was, “I was very specific in my career search and was not able to land the right opportunity. I took a few month vacation (after graduation) and I am back searching again.” Asked why he was not counted as actively looking, “because at the time that I was surveyed I was not looking, my plan was to pick-it up again in a few months.” He wanted a job when he came to Booth, and he is looking for a job now. Seems to me that he should be counted as looking but having not received a job offer. “I believe that I could have gotten a job offer through on-campus recruiting, but it would not have been the job I wanted. So I don’t mind being counted as not looking.”
As Professor Hurst pointed in class, an alternative way to measure the performance of the labor market is the total employment rate, those with jobs divided by the total population. Perhaps a better metric would be to calculate those with full-time jobs rate divided by the total graduating class so as to take into account the uncounted unemployed.
I reached to Career Services for comments but I did not get a response in time for this article.
Reid Tileston is a second year at Chicago Booth