The Unemployment Rate Went Down This Month Because Hundreds of Thousands of People Quit Looking for Work

Whitehouse.govWhitehouse.govThe unemployment dropped a decimal point in today’s jobs report, from 7.4 percent last month to 7.3 percent. Good news, right? Well, not so much. The reason the unemployment rate went down was not because people found jobs. It was because they stopped looking for them. In the last month alone, 312,000 people dropped out of the labor force, according to the Bureau of Labor Statistics.

People who aren’t looking for a job aren’t counted in the headline unemployment figure, and as the AP notes, right now the percentage of people who either have a job or want one—the labor force participation rate—is at 63.2 percent, the lowest its been since 1978.  

That weighs heavily on today’s numbers. If everyone who dropped out of the workforce had kept looking for a job, the unemployment rate would have risen a decimal point, to 7.5 percent. And the broader decline in labor force participation has also made a big impact on the overall unemployment-rate drops we’ve seen in the last few years: If the labor force participation rate were the same today as it was before the recession threw a wrench into the economy, the unemployment rate would be in the range of 9.7 percent.

As for actual job creation last month, well, there’s not much to get excited about there either. The economy added just 169,000 new jobs last month. That’s not nothing, but it’s pretty slow going. Ezra Klein points us to The Hamilton Project’s page on the “jobs gap”—the number of new jobs the economy has to create in order to both create enough work for new labor force entrants and return the economy to pre-recession levels. The Hamilton Project estimates that the economy needs to create an average of 208,000 jobs each month to get there by 2020. At last month’s pace, we won’t get there until sometime in 2023. 

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  • Hugh Akston||

    Why does anyone continue to take the unemployment rate seriously when we all know it's a bullshit number?

  • Nazdrakke||

    Among the political class these sorts of bullshit statistics are used as a way to 1) ease the pain of the double-thinking process and 2) flash around at the proles to distract and confuse them into returning to their television programming and tax farming. It's depressingly effective.

  • Copernicus||

    Here is a perfect example of how dishonest O'butthead is.

    Nothing clarifies the actual employment rate (and the trending) more than considering the growth or shrinkage of the workforce.

    And yet, I have never heard Mr. "Let me be perfectly clear" mention this statistical factor.

    That is lying by omission. He is not so stupid (almost, but not quite) to not know its significance.

  • Pro Libertate||

    I am still in shock that a president presiding over a moribund economy and high unemployment got reelected. Romney sucked, but he didn't suck that much.

    I hope America has learned her lesson, but she so rarely does.

  • ||

    The last election was an "evil you know" event. Both major candidates were shit weasels, and Gary Johnson still couldn't pull in decent numbers. America hasn't learned dick.

  • Ted S.||

    "When faced with a choice of two evils, I pick the one I've never tried before."

    --Attributed to Mae West

  • Mike M.||

    The lesson is that the old America gone, most likely permanently. It took over 40 years for it to happen, but the left finally succeeded in their goal of turning the country into a European style state where working is optional and being on the permanent dole during prime working years is no longer shameful.

  • Pro Libertate||

    I don't think we're quite there yet, but it's possible we are. We'll know for sure over the next few years.

  • ||

    The Unemployment Rate Went Down This Month

    Prediction: Shriek will remember this part, and only this part, for a future talking point.

  • Marc F Cheney||

    Worse, he'll probably turn it into a relative change and annualize it.

    "The unemployment rate dropped 45% in August, you wingnut Beckerhead!"

  • Drake||

    And it's BOOOSH's fault it was down in the first place!

  • ||

    Prediction: Shriek will say something that is obvious flamebait and there will be no shortage of people who respond.

  • db||

    An astute historian, this one.

  • ||

    Jobs. *Steve*...Jobs.

    I nominate this for alt text of the week.

  • SugarFree||

    2023? No one will even be able to understand anything Ezra Klein wrote by then, his words will be so old. Of course, 2023 won't be able to grasp that we couldn't understand him either.

    Ezra Klein is a dog dragging his asshole across the carpet of history.

  • Tim||

    Woof.

  • WTF||

    Ezra Klein is a dog dragging his asshole across the carpet of history.

    I am so stealing that.

  • SugarFree||

    You shall be visited by three ghosts.

  • SugarFree||

    You shall be visited by three ghosts.

  • SugarFree||

    DAMN YOU, 3PM!

  • WTF||

    So, six ghosts?

  • SugarFree||

    No, three will visit you twice. Learn to read, moran!

  • db||

    What, did they accidentally leave their keys on the end table? Ghosts sure are inefficient.

  • Copernicus||

    I believe it reads:

    2 separate people will be visited by 3 ghosts each.

  • 4thaugust1932||

    http://www.lietaer.com/2010/03.....xperiment/ will create millions of new jobs.

  • Redmanfms||

    No Tony or shriek in threads like this. What a fucking shocker...

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