Okay, that's more than a little melodramatic, but he does have a point. You know who else thinks he does? Fed Chair Janet Yellen. She's emphasized that the unemployment rate doesn't show us all the slack in the labor market right now. The Great Recession put us in such a big hole that you have also have to look at the long-term unemployed, involuntary part-time workers, the participation rate, how many people feel confident enough to quit their jobs, and how much people are getting paid to get a better idea of how the economy is really doing. She's actually talked about this a lot, and so has everyone else who writes about these things ... including, you know, me.
That brings us to one last question. If the unemployment rate is so flawed how come we pay so much attention to it? Well, because it's the worst stat about labor market slack except for all the others. The problem is figuring out which people who don't have jobs are really jobless. Take discouraged workers. The unemployment understates how bad things are by ignoring them, but we wouldn't want to count everyone who's not working and not looking for a job as unemployed, would we? If we did, then we'd be saying that college students and stay-at-home parents and even retirees are just as unemployed as someone who's sending out resumés everyday. But even that's not clear cut since some people go to school because they can't find a job, and some people stay at home since child care would cost more than they'd make, and some people are forced into retirement. That's why we look, for example, at the so-called prime-age participation rate—the percent of people between 25 and 54 years old who have or are looking for a job—to figure out far away we are from a real recovery. And by that measure, we still have a ways to go.
But even that's imperfect because it doesn't tell us why people aren't looking for work. It could be that the crisis convinced more people to go to college, regardless of whether they could find a job now. That'd be good. Or it could be that wages have been flat for so long and childcare's gotten so expensive that it's not worth it for people to work now or anytime soon. That'd be bad. Or it could be both. But if either is true, it'd mean that the unemployment rate is more accurate than you might think. In other words, since we can't read people's minds, the best way we can tell what they want is to look at what they've done. That's not entirely right, but it's the least wrong.
So the unemployment rate's not a big lie. But calling it one is.