Unemployment Rate Down, Jobless Misery Up

The fastest growing demographic group in America is long term unemployed people who have given up hope of ever finding a job and quit looking.  The headline numbers in the government’s monthly jobs report may have seemed “OK” to the casual reader: 115,000 jobs created in April as the unemployment rate ticked down from 8.2% to 8.1%.  “Solidly in the right direction” was the spin from President Obama and the Democrats.  But, across the land there were no spontaneous celebrations.  

Even the establishment media have begun – grudgingly – to acknowledge what we’ve been reporting here since last summer: behind these marginally positive numbers are more ominous statistics that track the relentlessly deteriorating economic circumstances of tens of millions of Americans.

Included in each monthly report is the Labor Force Participation Rate or the percentage of working age people who are counted as part of the labor force either by being employed or by qualifying for the status of “unemployed.”  The statisticians properly exclude from the ranks of “unemployed” those adults who don’t want a job, such as stay-at-home moms and students.  Also excluded are those who want jobs but did not “participate” in the labor force by actively looking for a job in recent weeks.  The unemployment rate is calculated by dividing the number who qualify as “unemployed” by the total labor force.

As the above chart shows, for 31 months the participation rate has steadily declined, in tandem with the unemployment rate.  The difference between the April participation rate of 63.6% and the 65% rate of October 2009, the first month in the chart, is 3.45 million people who want jobs but are not counted as unemployed.  If they had been counted the unemployment rate for April would have been 10.1%, unchanged from 31 months ago.

All across the internet Obama supporters snort that unemployment statistics have been compiled and calculated the same way since the 1940s, but no previous President suffered critics like us calling a declining unemployment rate bad news.  They’re right.  But, since the government began compiling these statistics in 1947 there have been nine recessions with job loses.  The current recovery is the only one out of the nine to see a decline in the unemployment rate result from reclassifying millions of jobless people from “unemployed” to “not in the labor force.”

The charts to the right show the first 31 months of each of the last three post recession recoveries.  During the 2003-06 and 1992-94 periods The Labor Force Participation Rate was virtually the same at the end of the first 31 months as at the beginning.  During the Reagan recovery of the eighties, the participation rate soared higher at the same time the unemployment rate dropped dramatically.

Here are the most shocking, numbers of all:

  • From the beginning of 2009 through April, 2012 the total working age population increased by just over 8 million people. 
  • Over the same period the labor force, the sum of those who are employed plus those who are seeking jobs, increased by only 129 thousand, less than one percent. 
  • The increase in the number classified as “not in the labor force,” or not working and not seeking a job has grown by 7.9 Million, or 99% of the increase in the working age population.
  • In April alone, while employers reported creating 115,000 jobs the number of Americans classified by the Labor Department as “not in the labor force,” or not working and not looking for a job increased by 522,000.

2 Comments so far

  1. Randal on May 7th, 2012

    115,000 jobs in a month is about half the average during the Bush years but the media said that was a jobless recovery. Now that their guy is President they say “we’re on the right track.”

  2. SenateStaff on May 7th, 2012

    these figures are distorted, especially the ones at the end. Labor force participation rate is down because of baby boomer retirements. That’s a good thing, isn’t it? People can retire in their sixties and not work till the day they drop?