The Lie That Is Our Unemployment Rate

This is not a "D" or "R" issue; it is one of those things where math is used to find produce numbers...and those equations seem to favor not really painting the true picture of the state of our labor market.

The good news today is that the unemployment rate has plunged to 6.3%. There was an increase of employment of 288,000. We can argue about full time/part time and other things, but an increase in employment seems like good news.

Then there is the flip side; the one that is not reported as much (in ANY administration that I remember):

"The drop in the unemployment rate from March’s 6.7 percent came as the agency’s survey of households showed the labor force shrank by more the 800,000 in April. The so-called participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, matching the lowest level since 1978, from 63.2 percent a month earlier."

(All info from http://www.bloomberg.com/news/2014-05-02/payrolls-in-u-s-rise-by-most-since-2012-unemployment-at-6-3-.html)

My question is (again, I am not directing this politically because these same methods have been used for years) this--is the job market really improving as much as we are led to believe it is by the 6.3% number when the participation rate is also dropping?

Just get to a 50% participation rate and the country would have full employment.

We keep hearing how many jobs are being created, but there are now 1,000,000 fewer people working than in 2007, while the population has steadily increased. The jobs that are being created are, for the most part, low paying service jobs.
Where is the recovery? Not where I live!

unemployment rate is such a false number.


as peoples unemployment runs out they are no longer counted in the unemployment rate. This doesn't mean they are now working, they just aren't being counted in the unemployment number.

The only thing that the unemployment dropping means is that more people are either losing benefits or finding jobs than are creating new claims. I would guess that there are more people losing their benefits opposed to finding jobs.

Even Fox has a slightly positive spin

It's going to be really interesting to see the next several months' numbers. The denial of the extension of benefits should accelerate both the number of people leaving the workforce and also the number of people finding (crappy) work. But, the unemployment rate almost has to go down (and dramatically) as people time out of the system.

If you read the actual report here you can catch the actual numbers instead of reading the spin.

The employment to population ratio has changed from 58.6% to 58.9% (143,676,000 to 145,669,000) people from April 2013 to 2014.
The size of the labor force is unchanged (155,359,000 to 155,421,000) in the same period.
Participation rate has fallen from 63.4% to 62.8%.
The number of people not in the labor force has risen from 89,815,000 to 92,018,000.

The number of people working part time has dropped by 500,000 (from 28,050,000 to 27,693,000).
The number of people working full time has risen by 2.4 million (from 115,674,000 to 118,073,000).

Average weekly hours is unchanged from 34.4 to 34.5 hours. Average weekly earnings has grown from $821 to $839.

So, even though the participation rate is dropping (which is largely responsible for the dip in the unemployment rate), there is true job growth going on, not as much as Americans hope, but it is there. And the jobs being found are largely full-time.

So there's good spin for both sides of the aisle.

92 million not working..........a new class of people emerging similar to the non working class in Britian?