Employment/Unemployment

[Henry Hawk]

The Big Lie: 5.6% Unemployment   

by Jim Clifton   


    Here's something that many Americans -- including some of the smartest and most educated among us -- don't know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.

Right now, we're hearing much celebrating from the media, the White House and Wall Street about how unemployment is "down" to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job -- if you are so hopelessly out of work that you've stopped looking over the past four weeks -- the Department of Labor doesn't count you as unemployed. That's right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news -- currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren't throwing parties to toast "falling" unemployment.

There's another reason why the official rate is misleading. Say you're an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 -- maybe someone pays you to mow their lawn -- you're not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

Yet another figure of importance that doesn't get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find -- in other words, you are severely underemployed -- the government doesn't count you in the 5.6%. Few Americans know this.
There's no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.

And it's a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. A good job is an individual's primary identity, their very self-worth, their dignity -- it establishes the relationship they have with their friends, community and country. When we fail to deliver a good job that fits a citizen's talents, training and experience, we are failing the great American dream.

Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America's middle class.

I hear all the time that "unemployment is greatly reduced, but the people aren't feeling it." When the media, talking heads, the White House and Wall Street start reporting the truth -- the percent of Americans in good jobs; jobs that are full time and real -- then we will quit wondering why Americans aren't "feeling" something that doesn't remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class.

  Jim Clifton is Chairman and CEO at Gallup.

[Bo D]

The Big Lie: 5.6% Unemployment   

This is the way unemployment has always been calculated, yet you aren't bothered when you tout the rates during during the years when repubs were in power. 

[Exterminator]

This is the way unemployment has always been calculated, yet you aren't bothered when you tout the rates during during the years when repubs were in power. 

Yes, but it's different now!   

[Henry Hawk]

According to Forbes...

Since Barack Obama entered the Oval Office in January of 2009,the percentage of the working age population actually part of the labor force (either working or looking for work) has plummeted by 3 percentage points – to 62.7%. Not since early 1978 has such a low proportion of the working-age population been in the labor force. In effect, the labor force is 7.4 million smaller than it otherwise would have been  had people either not stopped looking for work or, particularly with the case of younger Americans, simply failed to  start looking for work. In effect, nearly as many Americans have either  left the work force – or never entered —  in this recovery than have found a job.  That's a very distressing trend.  It also explains the big dive in the official unemployment rate to 5.9%.

[Bo D]

According to Forbes...

Since Barack Obama entered the Oval Office in January of 2009,the percentage of the working age population actually part of the labor force (either working or looking for work) has plummeted by 3 percentage points – to 62.7%. Not since early 1978 has such a low proportion of the working-age population been in the labor force. In effect, the labor force is 7.4 million smaller than it otherwise would have been  had people either not stopped looking for work or, particularly with the case of younger Americans, simply failed to  start looking for work. In effect, nearly as many Americans have either  left the work force – or never entered —  in this recovery than have found a job.  That's a very distressing trend.  It also explains the big dive in the official unemployment rate to 5.9%.

I repeat -

This is the way unemployment has always been calculated, yet you aren't bothered when you tout the rates during during the years when repubs were in power. 

[Exterminator]

I repeat -

This is the way unemployment has always been calculated, yet you aren't bothered when you tout the rates during during the years when repubs were in power. 

Don't cloud the argument with facts!

[Henry Hawk]

I repeat -

This is the way unemployment has always been calculated, yet you aren't bothered when you tout the rates during during the years when repubs were in power. 

It is STILL MISLEADING.

[Palehorse]

This is the way unemployment has always been calculated, yet you aren't bothered when you tout the rates during during the years when repubs were in power. 

[Henry Hawk]

Okay, here is a commentary that explains exactly what I am trying to relay to you guys.....

Obama has failed on jobs

At Northwestern University last Thursday, President Obama again claimed that "y every economic measure, we are better off now than when I took office." On the following day, the Bureau of Labor Statistics (BLS) released September's unemployment numbers and President Obama optimistically noted that "[t]he unemployment rate fell to under six percent for the first time in more than six years." Unfortunately, on both occasions, his optimism was overstated. A recent CNBC All-America Economic survey found that just 24 percent of Americans say they are extremely or quite confident in the president's economic policies and goals, while 44 percent say they have no confidence at all in the president on the economy.  The survey put Obama's support on the economy 15 percentage points lower than in August 2010, when the unemployment rate was 9.5 percent, compared with 5.9 percent today.

What does the American public know that seems to be escaping President Obama?  The reality is that our economy has been unable to create enough jobs even to keep pace with the number of people entering the employable population (those 16 years old and above who are not in an institution or serving in the military).  According to the survey, the BLS uses to calculate the unemployment rate, since the president took office in January 2009, the employable population has increased by 13.7 million people.  Unfortunately, the number of people employed has increased by only 4.5 million.  That's 9.2 million more people than jobs.  That's a serious problem.   

Why, then, did the official unemployment rate decline 1.9 percentage points from 7.8 percent when the President took office to 5.9 percent in September?  People dropping out of the labor force has been the primary driver reflecting the headline unemployment rate's fundamental flaw: It fails to count people as unemployed unless they have looked for work in the past month, which means that both the unemployment rate and the labor participation rate can decline because people are dropping out of the labor force rather than because they are finding jobs. 

The unemployment rate's unreliability in an era of declining labor participation is hardly a secret.  Federal Reserve Chair Janet Yellen noted in March that lower labor participation can mean that the "unemployment rate is overstating the progress in the labor market."   

So, how has President Obama been doing on this economic measure?  The labor participation rate has been at or below 63 percent for 11 of the past 12 months.  The last time it was as low as 63 percent prior to President Obama taking office was 37 years ago in April of 1978 during the Carter administration.  In September, it was 62.7 percent, an Obama administration record low.  Labor participation was last as low as 62.7 percent in February of 1978, also during the Carter administration.

When the president took office the labor participation rate was 65.7 percent, 3 percentage points higher than it was in September.  Had September's labor participation rate been 65.7 percent, the unemployment rate would have been 10.2 percent, or 2.4 percentage points higher than when President Obama took office.  In other words, but for the decline in labor participation, the unemployment rate would today be significantly higher than it was when the president took office.   That means the decline in the unemployment rate to 5.9 percent in September was solely attributable to the decline in labor participation.   

The president's supporters often argue that declining labor participation is the result of baby boomers retiring rather than the president's economic policies.  So, let's avoid the retirement issue and look at the labor participation rate for those ages 25 to 54, prime working age Americans.   

When the president took office the labor participation rate for this group was 82.8 percent.   By September of this year it had declined 2.1 percentage points to 80.7 percent.  Prior to President Obama taking office, the last time labor participation for this group of Americans was below 81 percent was 1984, during the early years of the Reagan Recovery.  Under President Obama, it has been below 81 percent for 8 of the last 12 months.     

When President Obama took office, the unemployment rate for 25- to 54-year-olds was 7.2 percent.  By September of this year, it had declined to 5.4 percent.  Sounds good.  However, if the labor- participation rate had remained at 82.8 percent as it was when President Obama took office, September's unemployment rate would have been 7.3 percent.  This is 0.1 of a percentage point higher than when President Obama took office, again demonstrating that the improvement in the unemployment rate for prime working age Americans was due entirely to a decline in labor participation.  There simply aren't enough jobs and people are giving up the search.     

While President Obama may not see this disparity between his speeches and reality, the American people do.  We've reached the point where very few people are listening to the talking point, no matter how well stated.  As the CNBC All-America Economic survey indicates, Americans know there aren't enough jobs for them or their children.  They also know that President Obama has been in office for over five years.   The Real Clear Politics average of eight recent polls shows President Obama's job approval rating on the economy at 41.4 percent.  A recent Wall Street Journal/NBC News poll found that 64 percent of Americans are dissatisfied with the state of the economy.  Nor do Americans expect much progress under this president.  In a recent The Economist/YouGov poll, 67 percent of those polled thought that in six months there would be fewer or the same number of jobs as there are today.   

The truth is that the economy is failing to create jobs at anything like the pace that would signal a healthy labor market. Ignoring what's really going on in economy will not reverse this trend.  Releasing America's entrepreneurs to do what they do best will.  Our government's increasing control over the businesses and daily lives of individual Americans has stifled that entrepreneurial spirit.  We need fewer empowered bureaucrats and more unbridled entrepreneurs.  We've had over five years of talking points and policies based on polling rather than economics.  It's time for a change. 

[Bo D]

What you failed to mention is that this was written by Andrew Puzder, CEO of CKE Restaurants Holdings. which owns Hardee's and Carl's Jr.

Like every other CEO, he wants less regulation. But there are tons of people starting businesses out there today--it's never been easier, thanks to the internet. There are various studies that have shown the number of new companies being created is now greater than it's ever been in history, by a mile. What's hurting is the lack of disposable income to buy the goods and services from those businesses, because jobs that produce said income have been shipped to China and India--by those same CEOs who now want less regulation so that they can make even more money. Why people with ninth grade educations can't see that is beyond me.

[Henry Hawk]

Maybe THIS, will make more sense to you.....IT IS the SAME comparison to when Bush was in office.....I agree, why people with ninth grade educations can't see that is beyond me.

Unemployment Rate - U6 2000 - 2014

[Bo D]

Maybe THIS, will make more sense to you.....IT IS the SAME comparison to when Bush was in office.....I agree, why people with ninth grade educations can't see that is beyond me.

Unemployment Rate - U6 2000 - 2014

YES!!!! PLEASE!!!! LOOK CAREFULLY AT THE GRAPH!!!!!

Look at when unemployment started to skyrocket! Hint! It was BEFORE Obama took office.

BTW, here's one that's just a bit more accurate ...

[Henry Hawk]

You are failing to see MY POINT.  Obama is claiming how good our economy is.  It isn't good, if you are talking to those who are NOT WORKING or UNDEREMPLOYED, the labor participation rate.....which is the lowest it has been since the Carter Administration.

13 MILLION more people has had to go on food stamps since Obama took office in 2009.

5.5 million Americans who have fallen into poverty since 2009.

And yet, just because the stock market is doing better, and the BIG LIE, unemployment numbers SAY they are below 6%....Tell this to the 13 Million on food stamps.

[Bo D]

13 MILLION more people has had to go on food stamps since Obama took office in 2009.

Yet ol' G.W. Bush holds the record for the most number of people added to the food stamp rolls.

U.S. Department of Agriculture's Food and Nutrition service for month-by-month figures going back to January 2001 show that under President George W. Bush the number of recipients rose by nearly 14.7 million. Nothing before comes close to that.

[Y]

You are failing to see MY POINT.  Obama is claiming how good our economy is.  It isn't good, if you are talking to those who are NOT WORKING or UNDEREMPLOYED, the labor participation rate.....which is the lowest it has been since the Carter Administration.

13 MILLION more people has had to go on food stamps since Obama took office in 2009.

5.5 million Americans who have fallen into poverty since 2009.

And yet, just because the stock market is doing better, and the BIG LIE, unemployment numbers SAY they are below 6%....Tell this to the 13 Million on food stamps.

And you want to claim that is Obama's fault?  You truly are an idiot.

The real problems with the economy can be laid at the feet of Laissez Faire capitalism and capitalistic policies - all those things you corporatists just love!

If Obama really started to correct that in any manner, you RW/TP idiots would be screaming 'Socialism/Communism!, Socialist/Communist!' all over the place...

...OH! Wait!  You are!  ; )