The Labor Department reported Friday that the U.S. unemployment rate climbed to 9.1% in May, up from 9% in April, as nonfarm payrolls swelled by only 54,000 during the month on a seasonally adjusted basis. “The disappointing report provided the latest and strongest evidence of a sputtering economic recovery,” the Los Angeles Times reported.
But Peter Drucker thought that the unemployment rate was a lousy number to zero in on. “Statistically, it is an abomination, an Alice in Wonderland stew of apples, oranges, and red herrings,” Drucker complained in The Changing World of the Executive. “The official figure dominates official rhetoric and thus induces political gestures which, while futile, are likely to be expensive, inflationary and the more damaging the less actual results they produce.”
Rather than the jobless rate, the statistic that Drucker preferred to look at was total employment—that is, the aggregate number of people in the labor force with jobs. “Total employment,” he wrote, “is far more important than any unemployment figure.”
And in that regard, things may be a bit brighter than they otherwise seem: May employment increased by 105,000 from April, according to the government’s household survey.
Drucker—who, as we’ve discussed, clearly understood the misery of being without a job—noted that during the recession of the 1970s, many businesses missed the fact that total employment was growing because they paid an inordinate amount of attention to the unemployment rate.
“Actually, both the number of people employed and the percentage of people in employment went down in only three quarters of the six years 1972-78, and then only by the merest flicker,” Drucker wrote. “In terms of consumer demand and consumer buying there was, in other words, no recession at all. But a great many consumer-goods and service business, seeing only the meaningless but official unemployment figures, completely missed this and, as a result, lost sales and market standing.”
So what do you think? Is the job situation still totally grim, or do you see some glimmers of hope out there? [/EXPAND]