Friday, December 2, 2011

The 8.6% Unemployment Rate is Complete Fiction

Today, the Bureau of Labor Statistics released the employment report for November, which showed that our unemployment rate hit 8.6%, the "lowest" since March of 2009. As I've mentioned before, the unemployment rate that is printed today is not comparable to the unemployment rates of even a couple of years ago thanks to the "labor participation rate" falling off since November 2008:

As you can see, the labor force participation rate is about 2% lower than it was thanks to people no longer being counted as being part of the labor force. This artificially lowers the unemployment rate, as well as U-6 which counts the underemployed (currently at 15.6%). I guess this is one way Obama can solve the unemployment problem, if he kicks all the unemployed out of the labor force, unemployment would technically be 0% statistically (that tells you how much you can trust statistics to tell you how well we are doing).

So how does the unemployment rate look if you keep it steady at 66%? Take a look at this graph where the red line is the published unemployment number and the blue line takes into account those kicked out of the labor force number:

Not very pretty is it? It also tells a very different story which is that unemployment peaked in October 2009 at 10.1% and has been falling ever since. According to this calculation, our peak unemployment was actually in July of 2011 at 11.9%!

Anyway, here is an official statistic which pretty much corroborates my story,the employment to population ratio. Basically, it's the percent of people over the age of 16 who are currently working. That number also only bottomed in July:

So if you feel that the economy still seems really bad, despite official statistics looking good, there's a reason. You're right!

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