March 04, 2022
I mention that, because some folks have been saying that only a relatively small share of the population is affected by unemployment. While this is true if we take a snapshot and say that 4.0 percent or so of the workforce is unemployed at a point in time. However, this badly misunderstands how the labor market works.
Six million people lose or leave their job every month. That comes to 72 million a year, or roughly 45 percent of the labor force. Of course, many people lose or leave their job more than once, so the total number of people changing jobs would be considerably less than 72 million. On the other hand, we also have more than 4.5 million people enter or re-enter the labor market every month. In short, rather than just affecting a relatively small group of people, the state of the labor market directly affects a very large share of the population over the course of a year.
I can’t say how people form their views of the economy, but it is simply not true that the level of unemployment and the state of the labor market only affects a small minority of the population. If we combine people who are directly looking for work or changing a job over the course of a year, and their family members, it is almost certainly a majority of the population. People may for some reason not factor in their labor market prospects into their assessment of the economy, but it is not because they are not directly affected by the state of the labor market.
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