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Clear Evidence That Unemployment Isn’t Improving Despite A Lower Unemployment Rate

5 March 2011 3 Comments

The following chart tells the entire story.  As you’ll see, employment as a percentage of population isn’t budging.  Yes, the unemployment rate is dropping but that is because people are stopping looking for work.

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3 Comments »

  • LearningHow said:

    I think this is only part of the picture. I believe that it isn't Obama's fault even though this has happened on his watch. Until the banks get some control put on them (because they are incapable of controlling themselves) we will all be subjected to their avarice.

    Competition is good, no question there. Uncontrolled competition turns into greed which harms everyone, and when there are no control regulations to say what isn't acceptable for the common good of all, what will define the absolute unacceptable? Greed will always go as far as it allowed.

    If people who can vote are swayed (controlled?) by greedy people like Rupert Murdoch, well….do something about it or live with it.

    Whichever way the US people decide, people all over the world have to live with their decisions because the world's banking system IS controlled by Wall Street and while ever they are buying your democracy, the rest of us outside the US have to live with it. Do you wonder why people are getting angier and angrier?

  • Felix said:

    I believe the data originated here: http://www.bls.gov/news.release/empsit.a.htm. http://www.bls.gov/news.release/empsit.nr0.htm is also useful.

    Both the employment-to-population ratio (the data 20smone cites) and the unemployment rate comes from here, which is the Bureau of Labor Statistics. The employment-to-population ratio is not used most of the time because it is not adjusted to people who are not in the labor force; it's simply (# of people working) / (total population). Hence, it doesn't take into account people who are retired, incapacitated, disabled, not searching for work.

    The unemployment rate dropped from 9.7% to 8.9% in Feb 2011 from the previous year. However, if you look at the raw data, you will find that in Feb 2010, there were 153.6 million people employed versus 153.2 million in Feb 2011. There were actually LESS people working in 2011 than 2010. 20smoney automatically asserted that since the number of employed did not increase, it must be that people left the workforce because they were discouraged, that the unemployment number must be rigged! However, that is not entirely true if you look deeper into the data.

    In Feb 2010, 83.4 million people were not in the labor force. In Feb 2011, that number increased to 85.6 million. Workers who have given up looking for work are called "discouraged workers", which is a subset of the "not in labor force" group. That number actually dropped from 1.2 million to 1.0 million. It's not all good news though. There is a larger subcategory, within the "not in labor force" category called, "marginally attached to labor force". This group represents people who are currently not working and have looked for work within the past 12 months, but is now not looking for work because of other responsibilities like taking care of family members, etc. This subcategory includes "discouraged workers", and rose from 2.5 million to 2.7 million.

    In any case, the point is this. The unemployment rate dropped from 9.7% to 8.9% in 1 year because the number of people "not in work force" increased from 83.4 million to 85.6 million. However, that increase of 2.2 million people were NOT from discouraged workers. In fact, number of discouraged workers fell by 0.2 million in the same year. That rise in the "not in labor force" group was not detailed in the labor report. I believe we can safely attribute it to the vast number of new retirees, as the baby boomers enter into their golden years.

    The conclusion is, yes, the unemployment rate is not 100% accurate, but in our current case, it still paints a somewhat true picture of the employment situation in the US (i.e. unemployment is dropping).

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