Money & Banking Assignment Example | Topics and Well Written Essays - 750 words

Money & Banking - Assignment Example It has been stated that the measurement problems occur especially during the business cycle contraction where the values are understated. Unemployment rate is understated due to a number of reasons. First off, underemployment is not regarded as unemployment, but is instead viewed as being employed. In tough economic times, job cuts are common in many organizations. Many people subsequently seek out jobs that do not utilize their full skill and knowledge potential (Horvitz 33). Though these jobs are temporary income earners to cater for the person’s daily need, the Bureau of Labor Statistics view these people as fully employed and does not count then against the national rate, leading to massive understatement. If a person who used to take home $140,000 each year has to take a job that offers $22,000, it is unfair to consider this person as employed (Horvitz 47). New entrants into the labor force are not considered unemployed. If for instance, a stay at home mum seeks out employment due to harsh economic times and fails to get employed, she will not get counted as unemployed by the authorities. There exist people under the age of sixteen who have taken up jobs to assist their families. Since they are below the age of 16, they are not counted as employed and if they fail to find work, they do not count as unemployed either. This adds up to massive understatement of the unemployment rate. The Bureau of Labor Statistics only considers one unemployed if you are actively involved in job hunting. Individuals who are jobless and are no longer searching for work are not counted as unemployed. They are therefore not included in the unemployment values rolled out every month, a phenomenon that without a doubt leads to understatement by massive margins (Horvitz 77). Some workers have had to involuntarily take up job sharing, working less hour shifts