Fake Unemployment Rate Fell Last Month…

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Good news people! Unemployment dropped!

The unemployment rate declined from 7.0 percent to 6.7 percent in December, while total nonfarm payroll employment edged up (+74,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade and wholesale trade but was down in information.

Yup, it dropped .3 percent but only 74,000 jobs were added. About those 74,000 jobs:

Once again, in its sheer panic to tout the quantity, or lack thereof, in the case of the December jobs number, the frenzied media and pundits completely ignored the quality of the jobs gained in the last month of December. Or lack thereof. Because as the simple breakdown below shows, of the 74K jobs gained in December, 55%, or 40K were the worst of the lot when it comes to wages or benefits: temporary jobs.

The real reason the unemployment rate has been dropping is because so many people are leaving the workforce completely. Last month 347,000 people left. While 74,000 were added and most of those were temporary.

Diving even deeper into the numbers is Steve Eggleston: (via Hot Air)

– 4,884,000 (seasonally adjusted) worked fewer than 35 hours due to slack work, an increase of 16,000 from last month.
– 2,592,000 (seasonally adjusted) worked fewer than 35 hours due to part-time work being all the work they could find, an increase of 93,000 from last month.
– 3,550,000 (not seasonally adjusted) worked both a full-time job and at least one part-time job, a drop of 41,000 from December 2012.
– 1,969,000 (not seasonally adjusted) worked multiple part-time jobs in lieu of a full-time job, a drop of 149,000 from December 2012.

All in all, if the labor force had stayed consistent since the end of the recession (according to the National Bureau of Economic Research’s Business Cycle Dating Committee) the unemployment rate today would be 10.8%. So why is it 6.7%?

Sean Davis:

To understand how the labor force numbers affect the unemployment rate, it helps to understand how the unemployment rate is calculated. First, BLS determines who is a member of the civilian non-institutional population: people who are 16 years of age or older who are not inhabitants of institutions (prisons, mental institutions, etc.) and not active duty members of the U.S. military. Next, BLS determines what percentage of those individuals are members of the labor force: that roughly consists of people who are either working or are looking for work. Then, BLS determines how many individuals within the labor force are employed. Subtracting the number of unemployed persons from the labor force gives you the number of unemployed, and dividing the number of unemployed by the total labor force gives you the unemployment rate.

If you hold total employment constant and increase the size of the labor force, the number of unemployed persons will increase, as will the unemployment rate. A shrinking labor force, however, can completely mask a serious job shortage by excluding those who stop looking for work altogether from the calculation of unemployed persons.

In June of 2009, the labor force participation rate was 65.7 percent (by way of comparison, the average of the last decade is 65.1 percent, while the peak was 66.5 percent in June of 2003). Since the end of the recession, that number has nose-dived. At the end of last month, it hit 62.8 percent — on par with what the U.S. experienced in the late 1970′s (although at the time, the number was on the upswing).

What does this all mean? Rather than being the sign of a vibrant economy, the falling unemployment rate is actually an arithmetic artifact of the BLS head-counting process. If the labor force participation rate had held steady since 2009, the number of people in the labor force today would total nearly 162 million people. Instead, BLS reports the official number to be just shy of 155 million.

And thanks to how BLS calculates and reports the official unemployment, those 7 million people are not included among the ranks of the unemployed. Add them back in and you have an unemployment rate that averages a very stubborn 10.8 percent since the end of the recession.


So while the media and the Democrats may be hyping the drop in unemployment rate today, there is nothing to celebrate.

It’s gotten worse.

Curt served in the Marine Corps for four years and has been a law enforcement officer in Los Angeles for the last 24 years.

9 Responses to “Fake Unemployment Rate Fell Last Month…”

  1. 2

    Nanny G

    Zero Hedge headline:
    People Not In Labor Force Soar To Record 91.8 Million; Participation Rate Plunges To 1978 Levels

    As long as the media touts a lobless and laborless ”recovery,” for Obama he’ll be fine.

    Also, and completely to the OPPOSITE of what liberal pundits claim, the labor participation rate of people who are older (babyboomers) is going UP while the entire labor participation rate is dropping!
    Older folks are NOT retiring and thus making the employment numbers look bad!
    Just the opposite!
    See it for yourself:

  2. 3


    You don’t understand.
    It is the job of the media to make Zippy look good.
    Chris Matthews explained that to us.
    It does not matter how many people want to work but can’t find jobs.
    All that matters is that some fake number is put together by removing unemployed people from the rolls, until the “unemployed” number looks good.
    The Blacks will vote for Zippy forever, despite the fact that they can’t find jobs. They get welfare (food stamps, subsidized housing, AFDC, Social Security, and so on). On the public dole, they have every reason to stay faithful to the Dems.
    The Jews will vote for Zippy forever, despite the fact that he will put them all out of work. They love him, you see, because he is politically correct.
    The Libs will vote for Zippy forever, because he is a devout Marxist.
    I wonder. Who will pay the taxes, once there are no more taxpayers?

  3. 4


    @Nanny G:

    You beat me to posting that page. Moreover:

    Curious why despite the huge miss in payrolls the unemployment rate tumbled from 7.0% to 6.7%? The reason is because in December the civilian labor force did what it usually does in the New Normal: it dropped from 155.3 million to 154.9 million, which means the labor participation rate just dropped to a fresh 35 year low, hitting levels not seen since 1978, at 62.8% down from 63.0%.

    As I calculate the math:

    There is a total American population of 317,413,000, with 246,700,000 of them eligible for the workforce.

    The number of unemployed Americans is (100% [246,700,000] – 62.8% [154,927,600] = y) y = 37.2% [91,772,400]. 37.2% unemployed is far more than the administration’s fake 6.7% number. it is an error difference of 30.5%

    That means only two out of three work force eligible Americans are employed. And what do the damned Progressives want to do? Grant amnesty to 11 million illegal invaders so that they can compete with the unemployed 91.8 million Americans for jobs.

  4. 8


    @Mully: #7

    It’s not just Obie who would do that, it’s Democrats in congress.

    As I have mentioned different times: We no longer have a two-party system. We have one party with two branches, and both branches are feeding off of the same roots. When the republicans had both the congress and the white house, did they:

    (1) Fix Social Security so only those who pay in get anything back?
    (2) Reduce spending?
    (3) Reduce the size of government.
    (3) End pork barrel spending?
    (4) Stop the illegals?
    (5) Guarantee a strong military?
    (6) End foreign aid? (Did you know we give Chine millions in foreign aid)
    (7) Reduce the national debt?
    (8) Quit borrowing?

    Several famous bloggers and news media people have given up on the republican party. I gave up on them years ago.

  5. 9

    Nanny G

    The Washington Post notes: “as it turns out, construction wasn’t the biggest contributor to the disappointing results. That would be the education and health-care sector”.
    The health care sector losing jobs???
    Here are health insurance companies admitting they are going to lose money by participating in Obamacare.

    CNN Money has more details: “the hardest hit areas were nursing homes, which jettisoned 3,900 jobs, and home health care, which lost 3,700 positions. Hospitals got rid of 2,400 jobs, while physicians’ offices reduced staff by 1,200. … Several notable hospitals, including the Cleveland Clinic, reported layoffs….”

    ObamaCare isn’t “helping” the health care industry. From all indicators it’s destroying it.
    Is this what Obama wanted?
    Does he secretly hope Republicans will refuse to bailout the medical insurers?
    That way, the Piven/Cloward way, the system collapses and the gov’t steps in to take over even more.
    Equality for all…… pathetic medical care but nice professional looking plastic policy cards for everyone’s wallets.

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