Free Markets, Free People
Today’s Employment Situation
First of all, let’s compare the current situation with employment with what the Obama Adnministration told us would happen if we didn’t pass the stimulus package. As has been obvious for some time now the stimulus is not–as we repeatedly predicted–substantially impacting the employment situation.
Instead, employment has risen by more than 3%.
Now, today’s surprise was not that there were a net 467,000 jobs lost last month, but that the employment rate went up by only 0.1%. The answer to that mystery is found in the employment data from the BLS, which shows that the civilian labor force declined by 358,000 people last month.
The Bureau of labor Statistics uses a neat bit of sleight-of-hand when calculating the unemployment rate. If you are not in the workforce, you aren’t counted as unemployed. You disappear from the numbers.
There are a number of ways to leave the labor force. You can retire. You can become injured or disabled. Or, you can simply become so discouraged that you stop looking for a job.
For the latter category, that means you may still not have enough money to house and clothe your family. and you might still really want to work. But there are no jobs for you, and if you stop actively looking for work, then you drop out of the labor force.
Granted, there’s no other way to really count the labor force, but this does help explain why the employment rate remained much more restrained vis a vis the actual number of net job losses. The number of people not in the labor force increased from 80,371,000 in May to 80,729,000 in June. That nearly equals the number of job losses, so the unemployment rate comes out nearly even.