If you’ve seen the articles I’ve written recently on the workforce framework, I want to show you something.

It has to do with the way politicians talk about the “unemployment rate”.

They often talk about the unemployment rate as if it is a competition, and they create confusion.

We saw an example last week.

But first, I want to talk about a statistic that politicians should compete, because it is much more meaningful for job seekers.

This shows how long it takes to find a job in Australia right now, in different parts of the country.

Over 100 labor markets

You will often hear people talk about the “labor market” as if Australia has only one pool of employed and unemployed.

But the world is more complicated than that.

In fact, the Bureau of Statistics divides Australia into 108 labor markets.

Each’s geographic boundary is designed to capture the labor supply (where people live) and demand (where people work) of unique markets across the country.

ABS officials consulted experts on labor market geography and analyzed home-to-work travel data from the Population and Housing Census to identify the different areas.

The map below shows where the boundaries are.

I made a table (see below) which shows the time it takes for an officially “unemployed” person to find a job in the 108 markets.

I showed the data from March 2021, as this was when the Australian economy was recovering strongly from the lockdowns of last year and the turnout was at an all time high (before the outbreak Delta in June).

I’ve included data for March from previous years so you can see how it compares over time.

Keep in mind that we have had some amazing times over the past 18 months.

As of March of this year, our international borders were still closed, net overseas migration had turned negative for the first time since 1946, job vacancies reached record levels, and billions of dollars in stimulus were flowing through the economy. .

It was not normal times.

Either way, you can browse the pages by pressing the arrow buttons located in the upper right corner of the table.

I have put the title numbers for each state and territory in different colors.

ABS officials say the “duration of job search” statistic can be used to identify the number of long-term unemployed in each labor market in the country.

And they collect detailed data from the 108 markets to track the fortunes of job seekers who have been looking for work for those periods of time:

• Less than three months
• Between three and 12 months
• Between 12 and 24 months
• More than 24 months

Of particular concern are job seekers who have not found work after a year of searching.

If the duration of your job search is 52 weeks (12 months) or more, you are considered long-term unemployed.

ABS officials say there are consequences of being out of work for such long periods of time, including financial hardship and loss of skills.

The more unemployed a person is, the more difficult it becomes for them to find a job.

As you can see below, the long-term unemployed have found it increasingly difficult to find a job over the past decade.

This corresponds to the following graph, which groups the experience of each job seeker into one statistic.

It shows how long it usually takes officially unemployed people to find a job in Australia.

Notice how the duration of the job search fell sharply after the recession of the 1990s, but then started to rise again after the global financial crisis of 2008.

It has become more difficult for job seekers to find a job over the past 13 years.

Is not it this what kind of statistics politicians should compete for?

Lower unemployment rate?

Which brings us to the last section.

I mentioned earlier how politicians often talk about the “unemployment rate” as if it is a competition and how they confuse it by doing so.

We saw an example of this last week from our Federal Treasurer.

You will see politicians from all parties doing it, but this is the most recent example.

Note the last point made by Josh Frydenberg, about the unemployment rate in particular.

Consider two things.

First, the unemployment rate doesn’t tell you what you think it tells you.

As I explained in Part 1, Part 2 and Part 3 of this series on the labor force framework, the unemployment rate is not tell you what percentage of Australians are out of work each month.

It’s much more technical and counter-intuitive.

This tells employers and economists what percentage of people in the “labor force” are immediately available to fill a vacant position.

The unemployment rate ignores millions of other people who do not have a job and would like to work, but cannot find work right now.

But when the unemployment rate is presented in competitive terms, it makes you think let the number tell you what percentage of Australians are out of work.

It is very misleading.

Secondly, in the economic profession, there is currently a very important debate on the concept of “full employment”.

According to current orthodox theory, an economy reaches “full employment” when the unemployment rate falls to the point where inflation and wages increase significantly.

It may sound strange, but it does say that an economy can be “fully employed” when the unemployment rate is 3 percent, or 6 percent, or 8 percent, or 10 percent.

It all depends on the structure economy at any given time.

In April, Treasury officials released a document saying they believed the level of full employment unemployment had changed in Australia in recent years.

They said they used to assume that the economy was in full employment when the unemployment rate was around 5 percent, but now they think the economy could have handled an unemployment rate of 4. , 5 to 4.75 percent without causing a break in wages.

This meant that they had miscalculated the ability of the economy to employ more people, over the past five years.

Could officials have done more to bring down the unemployment rate all this time?

He recalled Mr Frydenberg’s budget for 2019-2020, which based his strategy on not pushing unemployment to less than 5 percent.

See below.

Either way, the Reserve Bank thinks the unemployment rate could likely drop even lower than now.

This is part of the reason why it is comfortable to forecast an unemployment rate of 4% by the end of 2023.

He thinks the economy can support him.

But the question is: why can the economy support it?

What has happened in the economy that means that the unemployment rate may have to drop to its lowest level in decades for wages to rise?

Does this have to do with the creeping insecurity of the workforce? The decline of union power? The globalization of our labor supply?

As you can see from the Wage Price Index, wage growth has been steadily declining since the global financial crisis.

He set records last year.

Policymakers have struggled to understand why, as it is a global phenomenon.

Corn it’s the context in which the RBA’s forecast for an unemployment rate of 4 percent must be understood.

The RBA believes the unemployment rate may drop in the years to come – in part because of the billions of dollars in economic stimulus – and we will need it must be so low for wages to increase.

So see why it can be so misleading to define the unemployment rate in competitive terms?

A lower unemployment rate can mean a lot things.