The unemployment rate may have fallen from 7.9% in February to 7.7% in January, but the number of people not in the labor force has set a record all-time high. The Bureau of Labor Statistics defines those not in the labor force as those who are unemployed and no longer looking for work, including those who retired on schedule or retired early. CNS News reported the numbers:
“The number of Americans designated as ‘not in the labor force’ in February was 89,304,000, a record high, up from 89,008,000 in January, according to the Department of Labor. This means that the number of Americans not in the labor force increased 296,000 between January and February.”
This is why the official unemployment rate published by the BLS is really quite meaningless. It doesn’t take into account these people who are unemployed and no longer looking for work. There are likely millions of working-aged Americans in that very category. The unemployment rate only considers those who don’t have a job but are looking for work.
Writing for Market Watch, Rex Nutting makes the case that the “real” unemployment rate is around 9% or 10%:
“In 2012, the participation rate for the working-age population was 77.5%, down about three percentage points from the peak of 80.2% in 1997… It means that the vast majority of working-age adults, men and women, are working or looking for work. But it also means that many millions have given up hope of finding a job. Some of them will never work again. If the participation rate were where it was in 2007, about 3 million more working-age adults would be in the labor force, and the unemployment rate for that group would be about 9%, instead of 6.8%. That means that the ‘real’ unemployment rate is about two percentage points higher than the official rate.”
If you include the 8 million people who are underemployed (that is, they have to make due with part-time work, even though they previously had full-time work and are currently looking for full-time work), it brings the unemployment rate to 14.3%.
The BLS isn’t so much cooking the books as it is just publishing the numbers that are smallest. It gives the impression that the economy isn’t really all that bad after all, and we can all thank Obama for his tremendous effort to create jobs. Choosing the lower numbers also has the effect of creating an artificial bump in the stock market.
But it’s all a façade. People are dropping out of the work force, because businesses are crumbling under the burdensome taxes, regulations and mandates. The only way to get the economy going again is for the government to get out of the way.