The Importance of Economic Literacy
During the electoral season candidates, pundits, and advocacy groups tend to hurl economic data points at voters in order to influence their votes. To many, without the proper understanding, these figures can become difficult to contextualize or downright misleading. This article will lay out the case for economic literacy using unemployment statistics as an example.
Why Should You Care?
If you’re wondering why economic literacy is important. The short answer is that economic policy has some of the biggest impact on your life. Regardless of where you live or your political leanings every American is impacted to some degree by interest rates, the price of goods, the job market, and all of the other elements included in economic policy. According to poll data, Americans currently rate the economy as the third most important issue to them. Despite this, many Americans have not been properly educated to understand economic data and how policies impact the economy.
Due to this lack of comprehension, candidates are able to throw out talking points hoping that voters will not critically think about or challenge their assertions. It is important for voters to familiarize themselves with common economic metrics and to educate themselves about how our economy functions in order to make informed decisions at the polls.
Unemployment Data
An example of just how misleading economic statistics can be is the metric of unemployment. Unemployment is ostensibly designed to track the percentage of working age people who currently do not possess a job. While on paper this appears to be simple enough, the actual number presented to the public is obfuscating several key caveats. Namely, that the unemployment data normally referenced does not include people who are categorized as “discouraged workers”. These are people who have simply stopped looking for jobs, meaning that when people stop looking for employment, unemployment technically decreases.
Additionally, unemployment data fails to account for underemployment, the phenomenon of people who are only able to work part-time hours, less than 35 hours a week, despite looking for full-time work. Data shows that over 40% of recent college graduates are underemployed, and yet this alarming fact is not reflected in standard unemployment reports.
Conclusion
Because of how misleading the use of economic data has become in politics; it is important for voters to familiarize themselves with basic economic concepts and to do their own research using reputable sources in order to create an informed opinion on the matter. Looking at monthly employment statistics published by the US Bureau of Labor Statistics will provide a wider range of metrics from which to judge the performance of the US economy.
Furthermore, keeping track of the Federal Reserve, updates to America’s fiscal and monetary policy, and different inflation indexes ensure that you get a fuller picture beyond just how the stock market is performing.
Sources:
“Current Employment Statistics – CES (National).” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, www.bls.gov/ces/. Accessed 24 June 2024.
Dalaker, Joseph. “Underemployment, Recessions, and Poverty.” CRS Reports, Congressional Research Service, 14 Oct. 2021, crsreports.congress.gov/.
Jones, Jeffrey M. “Immigration Surges to Top of Most Important Problem List.” Gallup.Com, Gallup, 27 Mar. 2024, news.gallup.com/poll/611135/immigration-surges-top-important-problem-list.aspx.
“Total Unemployed plus Discouraged Workers, as a Percent of the Civilian Labor Force plus Discouraged Workers (U-4).” FRED, The Federal Reserve Bank of St. Louis, 7 June 2024, fred.stlouisfed.org/series/U4RATE.
“Underemployment Recent College Graduates U.S. 2023.” Statista, Statista Research Department, 22 Feb. 2024, www.statista.com/statistics/642037/share-of-recent-us-college-graduates-underemployed/.