Monday, February 13, 2012

Don't believe everything you read

So the unemployment rate has dropped to 8.3 percent, so everything is getting better, right?


The unemployment rate is a mathematical calculation using: the number of people in the labor force and the number of people in the labor force who don't have a job. Reduce the size of the labor force -- as happens when people just give up looking for work -- and the unemployment rate automatically goes down.

So now you have those who are "officially" unemployed -- plus those who would like to be employed but have given up looking.

And you've got another group, too -- those who are "underemployed." They found a part-time job at Wal-Mart, but they'd rather be working full time. Probably their whole cost structure -- mortgage, food, gasoline, etc. -- was developed when they were employed full time, so they're in trouble.

Peter Ferrara writes in Forbes:
In the latest, much celebrated, unemployment report, the labor force participation rate had plummeted to 63.7%, the most rapid decline in U.S. history. That means that under President Obama nearly 5 million Americans have fled the workforce in hopeless despair. 
The trick is that when those 5 million are not counted as in the work force, they are not counted as unemployed either. They may desperately need and want jobs. They may be in poverty, as many undoubtedly are, with America suffering today more people in poverty than in the entire half century the Census Bureau has been counting poverty. But they are not even counted in that 8.3% unemployment rate that Obama and his media cheerleaders were so tirelessly celebrating last week.
If they were counted, the unemployment rate today would be a far more realistic 11%, better reflecting the suffering in the real economy under Obamanomics.

Some additional facts highlight how misleading the reported unemployment rate, and the political rhetoric around it, can be.
One year ago, 99 million Americans were unemployed or otherwise not working, and the unemployment rate was 9.1%. Today, while the reported unemployment rate is 8.3%, over 100 million Americans are unemployed or otherwise not working.
Figures lie, and liars figure.

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