Time For Our Monthly Dose Of Unemployment Fantasy.


Well, its’ time again for our monthly dose of unemployment fantasy. The statistics on unemployment will be forecasted by ADP, and then reported by the Department of Labor with revisions and forecasts which will then be tacked to the President’s overall performance. Depending on your political vantage point, and your network of choice this will be heaped into the 24 hour news cycle driving presidential polling and market numbers up or down.

The U-3 unemployment number which was reported at 8.3 percent at the end of January was rumored to have moved north of 9.0 by mid-February. This number, irrespective of the reporting date is a façade.  Why?  The Bureau of Labor Statistics allegedly measures unemployment using the following for the U-3 rate: “total unemployed, as a percent of the civilian labor force.” 

So, what is the current total unemployed (working-age Americans, eligible to participate in the civilian labor force, but not currently working) percentage of the civilian labor force? The answer is 36%

This is the lowest labor participation rate in thirty years, and comprises the worst employment situation since the Great Depression.  Labor force participation is the number we should really be looking at. The Bureau of Labor Statistics figures have some use; however, is it not logical to measure overall employment health through the measurement of those who are not participating in the labor force? I would suggest that we keep this metric in mind over the next few news cycles.

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Posted on March 1, 2012, in Uncategorized and tagged , , . Bookmark the permalink. 2 Comments.

  1. “…eligible to participate in the civilian labor force, but not currently working…” achieves too little meaning when simply described as one mark in 30 years and since the Great Depression. Neither does it ring-out amid the dissonance we hear about Unemployment Agency data versus that count plus those who have given up the job search. Saying its the one number to look at quenches noone looking for a robust blend of data where the complexities of our economy may be appreciated. I might start with the question, “Is it not possible that, in times of greater prosperity and a narrowing of the wealth gap, that the (purported) number of people eligible but not working would either go up or vary from the presumed downward trajectory?” Emphasize “eligible” and you may notice the fragility of a number that counts people like ingots and regards valued work as only that which is detectable to the IRS.

    • Fred…just reversing the oversimplification used by the media, and others to justify a “new normal.” 8.3% ? Really? Just as a matter of fact, like the sun rising and setting, we are to accept 8.3% as fact. No. Start at the polar opposite, which is the delta between 100% and the actual participation rate of those eligible to participate in the workforce. Let’s just pretend that there not millions of eligible participants that prefer to remain nursing at the breast of Mother Entitlement or that many of the firms appointed to the White House’s Council on Job Growth have outsourced millions of jobs…and on and on. The U-1, and U-2 are close. The U-3 is laughable, and the U-4 & U-5 at 8.9 & 9.9 respectively are not much better. The U-6 at 15.1 reflects a bit more of the truth. When you account for the SGS alternate unemployment measure which reflects those that were defined out of existence in 1994….that’s right they exist, but are not counted; the rate is roughly 23%. It is what it is Fred, and I wish it wasn’t because it would make my job a lot easier. Jim.

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