If you listened to either the media or the government, then the most recent employment situation must have seemed pretty rosy. After all, the last jobs report indicated a healthy 213,000 net jobs created in June, so, as far as most Americans are concerned, it’s hard to see any downside in what seems to be an economy that’s chugging along just fine.
The thing about statistics, however, particularly government statistics, is that the downside is often hidden in plain sight in parts of the report that few people pay any attention to, let alone understand. The media certainly doesn’t want to talk about the labor force participation rate, because it collapsed to historic lows during Barack Obama’s presidency, and the Republicans certainly don’t want to talk about it, because it’s not improving under their regime.
Instead, both sides focus America’s attention on the smoke and mirrors of a 4.0% official unemployment rate at historic lows, but have you ever wondered what the official unemployment rate even means? As it turns out, the official unemployment rate doesn’t mean all that much, since it represents just the people who are jobless, but only if they are in the labor force, but who isn’t in the labor force isn’t always as straight forward as one might think.
Sure, usually it’s just high school or college students that aren’t working, so, obviously, they aren’t in the labor force, so they shouldn’t count toward the unemployment rate one way or the other. But what about, for example, hundreds of people laid off after the only manufacturing plant in their city closed down years ago, and their unemployment benefits have since dried up?
Well, they stop being in the labor force, so they simply aren’t counted as being jobless, even though they very much are jobless, and often desperately so. Even still, both the labor force participation rate and, more insidiously, the official unemployment rate tick downward, and those hundreds of people just vanish from the reports.
The official unemployment rate had improved to 3.8% in May, but the labor force participation rate also dropped to 62.7%, 0.2 points worse than when Donald Trump was sworn in on January 20th, 2017. In June, the official unemployment rate worsened by 0.2 points to 4.0% when the labor force participation rate increased to 62.9%. What does this mean?
It means that whenever people do try to reenter the labor force, they can’t find lasting employment opportunities, so they don’t stay in the labor force. It means the official unemployment rate is at 4.0% because our government simply stopped counting a lot of people. How many people?
If the labor force participation rate were still at its peak (roughly around 67%), roughly 10 million more Americans, that’s the entire population of New York City plus an additional 1.5 million people, would still be in the labor force. They aren’t. Why not? Because if they were, the official unemployment rate would be 10.3%, and Americans wouldn’t tolerate it.
But now you know, so why are you tolerating it?
Liberty is For The Win!