No, America's unemployment rate is not 8.6 percent
News from the Labor Department on Friday revealed that the unemployment rate in America miraculously improved, with only 8.6 of the country without jobs. If you think the news was too good to be true, that’s because it is.
As the Department of Labor tells America that the percentage of the country without jobs is at a two year low, many Americans celebrate what hopes to be a recovery from a long-lasting recession that has spawned dire unemployment figures for over two years. On the contrary, the statistics for November are represented as good as the government makes it up to be because just that — it makes them up.
Yes, the US economy spawned around 120,000 jobs last month, but at the same time, around 315,000 Americans left the labor force — that is, they simply gave up. While 8.6 of Americans are unemployed in the sense that they are out of a job and actively seeking work, hundreds of thousands of people have simply stopped even trying to get a paycheck.
November’s figure, 8.6 percent, is actually the proportion of Americans unemployed, “as a percent of the civilian labor force,” as per the official definition from the Labor Department (a figure it refers to as “U-3,” the official unemployment rate). When considering those that fit that definition as well as discouraged workers (U-4), those marginally attached to the work labor force (U-5) and those that are employed part-time and seeking full-time employment but can’t find it, the Labor Department has another statistic, which it refers to as U-6; for the month of November, that figure is at 15.6 percent.
The actual number of Americans who have given up a while ago isn’t firm, but the latest statistics — though painted pretty by the Department of Labor — reveal that November saw 315,000 new Americans abandoning their job hunt.
“You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing,” James Glassman of New York City’s JP Morgan Chase & Co. tells Bloomberg News. “That’s probably exaggerating the trend in unemployment.”
As civilians leave the labor force, obviously the percentage of those participating in the market drops as well. Should the jobless numbers be compared to those participating in the labor force when Obama entered office in 2009, the U-3 unemployment rate would be at around 11 percent now, reports CNBC contributor James Pethokoukis.
Even taking into account the Labor Department’s definition of what counts as employed, 20 of the 50 states in America (plus the District of Columbia) saw jobless figures exceeding 9.0 percent for the month of November. In California and Washington DC, numbers were at or above 11 percent; in Nevada: 13.4 percent.
Steve Eggleston of Hot Air adds that this seasonal drop in the civilian labor force is “almost unprecedented” for this time of year. “Since 1982, there have been only seven times the labor force has dropped between an October and a November, and only three times has the drop been even close to this steep,” adds Eggleston.