Reality Provides a Real Unemployment Rate
by Jason Greene, Kansas City Economic Policy Examiner, Examiner.com
With a new year comes more disheartening employment news, the Bureau of Labor Statistics (BLS) recently reported that the unemployment rate dropped from 9.8 percent to 9.4 percent during the month of December. How can this decrease be disappointing, isn’t this new information encouraging? On the surface it is, but once examined beneath the statistics and data another thing appears, actual facts.
According to the BLS, during the same time period, the United States economy only gained 103,000 new jobs, not even enough to keep up with the population growth. The unemployment figures didn’t decrease due to the numerous policy interventions of the federal government, but to the way that information is reported.
The BLS only reports an individual as being unemployed if they are currently seeking work, last month that number decreased. This decrease demonstrates those who have become discouraged with their employment prospects and are no longer looking for work, these individuals no longer meet the BLS label of unemployed and are no longer counted within the report. In other words, the unemployment rate fell because the number of discouraged individuals increased, not because employment rose. Demonstrating this fact is the recent climb of these discouraged job seekers, totaling to 929,000 in December, the largest since the documenting of such began.
Last month, the United States labor force also shrunk by 661,000. Had these workers and job seekers continued their employment and search for such; the actual unemployment report would have been around 10.4 percent. In addition, this number is also excluding the 1.7 million Americans who have left the workforce from July of last year to the present. Considering these facts and the nature of temporary holiday employment during the month of December, the BLS figures offer little to be optimistic about.
In a less publicized employment indicator, the underemployment rate, a more accurate view can be attained of the severity of the market. In counting unemployed and discouraged individuals, along with part-time workers who cannot get full-time work, the numbers rose from 17.2 percent to 17.3 percent last month. These numbers show that it is actually becoming more difficult for individuals to meet their employment goals. This information provides a more grimly picture of the job market than the BLS numbers, sometimes reality gets in the way of reported statistics and data.
http://www.examiner.com/economic-policy-in-kansas-city/reality-provides-a-real-unemployment-rate
