From Doug French’s featured article today on mises.org:
“The headline jobless number has one in ten people out of work. Include those who have become discouraged and dropped out of the labor force, and the number is one in five.”
Is it fair to include people who have become discouraged and dropped out of the workforce as part of those unemployed? Considering a boom period can raise real wages in the short term, isn’t it reasonably likely that a good number of the now-discouraged unemployed are just people who, in an economy without credit expansion and resulting boom/bust cycles, would not have jobs because they value their leisure over the wages supplied by the unhampered market? A boom period, in the short term, can inspire happily unemployed people to start looking for work, correct?
In the absence of a free market, we simply don’t know. But we do know that inflation-induced boom-bust cycles and labor regulations create unemployment. The State, as always, is guilty.
In fact it is likely the opposite, a boom allows people to leave the work force, for example by going to university with boom-financed student loans. This means that the unemployment rate will fall despite the fact that no jobs have been created.
OK, well I’m getting from the responses that I’m in the right to be skeptical about claims about what the correct (read: higher) measure of current unemployment is. Though I certainly don’t object to the fact that an inflation-induced boom-bust cycle causes unemployment.