What Is the Employment-To-Population Ratio?

The employment-to-population ratio is a measurement that is applied toward the collation of the dynamics between the total working employees or workers who have some form of employment in juxtaposition to the total workers in the region under consideration. That is to say that the employment-to-population ratio seeks to find the rate of employment or the rate of unemployment in a stated geographical location through the calculation of the statistics obtained during such an employment-to-population ratio application. One fact that can be deciphered after the application of this model is a determination regarding whether the resultant figures prove that the economy is functional as it should by creating enough work for the aggregate labor force. This model will also show the percentage of workers that need to be employed, giving analysts an idea of the state of the economy and a yardstick for the measurement of the macroeconomic factor of Gross Domestic Product (GDP) for the region.

Even though the employment-to-population has its merits, some critics are of the opinion that this measure does not give an accurate representation of the employed to unemployed versus total workforce ratio due to several identified factors. One of the reasons put forth is the fact that this measure fails to include certain categories of workers in the calculation, including people like undocumented workers, those excluded based on their age, and others. For example, a considerable number of workers are employed in some capacity in the economy, even if they are not officially represented due to any number of considerations. Such people are usually paid in cash, and they still contribute to the economy through their productivity and consumption even if they do not officially exist.

Another category of workers that are usually excluded from the calculation of the employment-to-population ratio are those who are either above or below the target demographic, but who still work and contribute to the economy. An additional factor that might negatively affect the application of the employment-to-population ratio measurement is the fact that some people choose not to work due to personal reasons. For instance, some workers who have some form of family support or other form of financing might choose to refrain from working in other to start a family or for the sake of signing up in a school in order to pursue higher education.