The official unemployment rate says 12.5 million Americans are unemployed. The number is actually 23 million, nearly doubling the real unemployment rate.
The Department of Labor posted a new employment report yesterday showing that the unemployment rate had fallen from 8.3% to 8.1%. The President, knowing full well that number hides an ugly truth, brags about the recovery he has created. Who is falling for this? Too many, sadly. The devil is in the detail, and detail is something we don’t pay enough attention to.
What this statistic does not account for is the number of people who are dropping out of the work force completely, and workers who are part time looking for full time. They retire early, they decide to downsize their expenses and stay home with their kids, or they enter some sort of lifetime public aid program. Based on the report yesterday, the percentage of Americans counted “in the workforce” (meaning they are counted as employed, or unemployed and looking for work) is the lowest it has been in more than 30 years. This “lowers the numerator” in the unemployed-divided-by-employed equation. The official report says that 12.5 million Americans are unemployed. However, more than 23 million Americans are looking for work and can’t find it, or dropped out of the labor force. So while the government tells us 12.5 million are unemployed, they are off by almost a factor of 2. See the chart below, from the Department of Labor yesterday, for the “U6” rate of unemployment:
The reasons we aren’t recovering are obvious, and the economy and the President are only helped by the incredible resiliency and “desire to fly” of the greatest free society in the world. But a President who has an administration full of people who want to “crucify oil companies”, who vilify business and profit, who want to regulate nearly every aspect of our economy, and that refuses to offer budgets and sound long-term fiscal plans, are bound to snuff out economic growth. That we haven’t crashed yet, and to the extent we may recover some over the next several months before the election, will be in spite of the President’s policies, not because of them.
The latest unemployment number hides a once-great society gasping for its economic breath. The President can say and believe whatever he wants to, but we don’t have to fall for it. We need to send him make him a part of the numerator in November.