8.5 % or 12 % ???

 Something is rotten at the BLS; this isn’t "Morning in America".

I have seen liberals crowing about the great economic news: unemployment hit 8.5%! Obama is a genius! Stimulus is working! 4 more years, yada yada. This is all a big bunch of crap.

Take a look at the actual data, people:

This shows the labor breakdown by age in 2010 This shows the labor breakdown by age in 2011

Biggest thing that is really, really off about these numbers: if you compare both years, even though we’ve gained (net) working-age population of 2.754 million (240.584 million in 2011 – 237.830 million in 2010)…the actual number of people in the labor force…DROPPED. That’s right, you’d think that if after over 2.5 million people entered the workforce, we would have the amount of our labor force increase, but it didn’t. It actually dropped by about 500,000.

Let me explain some terminology from these: civilian noninstitutional population is basically everyone over the age of 16; so this should everyone that can be employed. So in 2010, this number was 237 million.

Of that, 154 million is the "labor force". This is actually calculated by subtracting everyone "not in the labor force" from the working population; so for 2010 you take 237 million – 83.941 million (not in labor force) to get 153.889 million; that was our "civilian labor force" in 2010. People "not in the labor force", according to the BLS (here), are people that are non-military, not in a jail/mental home/old age home, as well as those not looking for a job for whatever reason. Could be they are frustrated, went back to school, retired, etc.

So out of 237 million people in 2010, 83.941 million are not even counted in the labor force. They aren’t counted as unemployed at all, even if they are in fact out of work. They just have to answer "I don’t want a job". Note that even if they have NO job, if they say "I don’t want a job", or not looking for a job in the last 12 months, they are NOT considered as unemployed! They are considered "not in labor force", and aren’t counted as part of the unemployment rate. This is the big deception.

And the big problem? From 2010 to 2010, 3.2 MILLION people were added to those "not in the labor force", so now it stands at 87.2 million. Why were all these people added? Well, they aren’t what you might think: a large influx of workers retiring. Only about 1 million people retired last year and collected SS. You can check here and compare Dec 2010 with Dec 2011.

And in fact, if you look at the BLS data from 2010 to 2011, you’ll see that the % of workers over 65 in the labor force actually INCREASED. What happened is that lots and lots of YOUNG WORKERS just decided to drop out of the labor force completely, and that’s where all these "labor drop outs" came from. The numbers: Ages 16-19, went from 65% "not in labor force" in 2010 to 68% in 2011. Ages 25-54, went from 17.8% in 2010 to 18.4% in 2011 Ages 55-64, went from 35% in 2010 to 36% in 2011 Ages 65+, went from 82.6% in 2010 to 81.7% in 2011. So it’s not more seniors retiring early that’s causing this huge jump in "not in labor force", they are retiring later!

These people didn’t retire at age 19 or 35; they simply dropped out of the labor market and are not on unemployment (and not employed). And that is the reason why the unemployment % fell, they simply aren’t counting millions of people as unemployed anymore. Doesn’t it seem strange that Obama would crow about these numbers, when he KNOWS that the real reason the unemployment % fell was not because there are more jobs, but because millions simply aren’t counted as unemployed? What is he trying to pull?

The number "not in labor force" is really high right now, it stands at 36.25%; this means those "in the labor force" is 63.75% (they add up to 100%). If you look at recent history ftp://ftp.bls.gov/pub/special.requests/lf/aa2008/aat1.txt you will see that that last time the % of labor force was as low as it is now….was 1979! That’s right, it’s been around 64-66% for over 30 years…until now. During recession of 1992, 2001, etc. it NEVER dipped below 66%. Why now?

So yes, the more people drop out and don’t even bother looking for a job, the more people are in the "not in labor force", and the BLS will keep dropping the unemployment rate! Clearly having so few people as a % in the labor market should be a worrying sign to everyone, as people are dropping out of the labor market across all age groups.

According to the BLS, we’ve added about 1.6 million jobs in 2011. That would be ok, except that again we added about 2.5 million people to the workforce in 2011.

In fact, if you look at the number of unemployed from the BLS, we still have more unemployed than when Obama took office, over 13 million. What’s probably happening is that because the economy is still weak, and the job market slow to hire, many people are simply unable to keep looking for work for YEARS now and are dropping out, potentially never to return. Their skills will atrophy, their attitude toward working souring for years, and then when they return they will be older with a huge gap in the resume. Over 13 MILLION people are still unemployed.

The fact of the matter is that there is no reason why the unemployment should be falling at all, given that we didn’t add enough jobs (1.6 million) to cover our population growth (2.5 million). If we didn’t add enough jobs to cover population growth in 2011, why would the unemployment rate go DOWN? It should have gone UP this year. It’s only because so many people have given up, and the amount in the "labor force" decreased by so much. If these people did not drop out, and in fact the labor force was actually 65.9%, the historical average the last 30 years, with the same # of employed as we have now: The labor force would be 158.5 million The # of unemployed would be 17.8 million (!) The unemployment rate would be…11.2%.

11.2% unemployment, that is simply if the labor force % was the same as it has been the past 30 years.

If the labor force % was 66.5%, which is what the labor force % has been on average since 1990 (never falling below 66%), with the same number of employed as we have now: The labor force would be 159.9 million The # of unemployed would be 19.3 million (!) The unemployment rate would be…12.0%.

This is not some idle speculation. Remember people, there are 87 million(!) people that are "not in labor force", while in 2008 there were only 79 million (see here). As a %, 34% were "not in labor force" in 2008, now it’s 36.25%. Doesn’t seem like much of a difference, but that extra 2.25% adds up to MILLIONS more people that have simply given up, AND aren’t counted as unemployed.

So the REAL unemployment rate of 12% actually makes more sense. There are 13 million "unemployed" (in the traditional sense of the BLS), and there are another 6 million (out of the 87 million "not in labor force") that really SHOULD be counted as unemployed. This doesn’t even count those "underemployed", working part-time when they want full-time; that would include MILLIONS more. The BLS happily reports the lower unemployment numbers of 8.5% to make their boss (Obama) look better; who would want to report the REAL unemployment rate, 12%?

So, still think it’s a "solid job market"?