I understand the need to exclude the young, old, disabled, and homemakers but why do unemployment statistics not include those who are simply living off of welfare and not intending to work (or on the opposite end of the spectrum, those living off of a trust fund)? Is this subset of the population just not big enough to be worth including in the statistics?
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So I’ll give you part of it. People who aren’t looking for work are taken out of the equation because there are many reasons they may not want jobs. Stay at home parents, early retirement, living of investments, taken care of a family member. So it’s difficult to put them in the number. Some people work until 70 or 80 but we don’t include all 65+ year Olds as unemployed. This is part of the answer. I’ve seen the whole break down but can’t seem to find it.
There are six official unemployment metrics in the US called, creatively, U-1 though U-6. They include more and more people as the number increases, and U-6 probably corresponds more closely to what you’re looking for. The so-called headline number that is frequently reported in the media is U-3, because it generally gauges the ease of finding a job if you’re looking, but there’s a lot of criticism of it, particularly for excluding discouraged job-seekers.
But you can generally find the U-6 number in most articles when the monthly unemployment numbers are released (typically the first Friday of each month), and they are posted in a pretty great format on r/economics.
Because those people are, in terms of employment, irrelevant. Someone who is not employed and doesn’t want to be employed has no role to play in the employment “market” or statistics.
The point of the unemployment statistic is to get a sense of how “tight” the labor market is. The higher the unemployment, the more that employers can pick and choose among the many, many applicants for candidates; the market is in the employers’ favor. The lower the unemployment, the more that employers might struggle to fill positions because there might be very few or even zero qualified applicants for those openings; the market is in the employees’ favor.
People who aren’t actively looking for jobs don’t factor into unemployment because they will never affect that balance. If they decide to start looking, they will then be counted, but if they aren’t and don’t intend to look for work, then they might as well not exist, in the eyes of employees and employers.
I thought it was based on unemployments claims paid and those benefits run out whether you want them to or not.
With statistics it’s always useful to ask “why do we want to know this? What is it meant to tell us?”
Unemployment is a measure of people looking for work who can’t find it.
This is a bad thing for those people. Mostly because many of these people will be in financial trouble because they don’t have a job to earn money. Even if they are financially comfortable, they still haven’t been able to get something they want.
So we want to reduce unemployment because it’s a bad thing for people
If people aren’t looking for work then unemployment isn’t a bad thing for them – at least, that’s an assumption that’s made (how true it is up for debate).
From another perspective, people looking for work are available to the labour market. The more people who are looking for work, the easier it will be for companies to recruit and the lower the wages they can offer.
People who aren’t looking for work aren’t really relevant to that – well not unless they get a *really* good job offer. (But then you might as well include retired people, homemakers, etc..)
So it’s not that these groups aren’t interesting. Although they are probably a small number, depending on who you’re counting as “living off welfare” and the welfare provision in the country you’re looking at (and maybe some tiny, really rich countries have lots of people living off trust funds, savings and the like). They’re excluded because of the what “unemployment” figures are usually used to show.
That is just what that statistic is. Labor Force Participation Rate is what is used for the number of people considered “working age”. This number includes the ones not in the unemployment statistics.
All the other comments have very good answers.
In addition:
> I understand the need to exclude the […] homemakers
How do you differentiate between someone living off a trust fund, off welfare, and a homemaker.
These things are not remotely mutually exclusive and very hard to define reliably…
In the end, counting the people who look for jobs but can’t find one is a much better indicator of how the labor market performs.
Welfare benefits (cash assistance) ended many years ago in most if not all states. There’s no program that picks up people who no longer qualify for unemployment benefits, so there’s no list or roster to draw from.
The idea of people simply living off welfare has been repeatedly proven to be false. Getting assistance and staying on it actually requires a lot of work. Many programs require re-verification multiple times per year and many will trigger recoupment if you are found to have lied about assets or otherwise got benefits you weren’t due. Also the amount of money given by many programs is laughable. Getting $250/month in food stamps for a family of three isn’t going to have you living like a king.
About the people living of welfare: as far as I’m aware, you usually have to be officially looking for work to recieve welfare, so those people are counted.
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