- The Washington Times - Monday, January 9, 2012

The White House has trumpeted recent rosy employment figures, but in their guts Americans know things aren’t getting better. They should trust their instincts.

Jobs are the No. 1 issue going into the 2012 election, which makes the unemployment rate a particularly important indicator. Lately, the trend seems to be favoring the White House. The December unemployment numbers showed a drop to 8.5 percent, down 0.2 percent from the previous month and over half a percentage point from August. In the “jobless recovery,” small moves like that take on outsized significance.

According to the Bureau of Labor Statistics, in the last 12 months, a net of 1.5 million more Americans found work. This sounds like good news, but the civilian non-institutional worker population increased by 1.7 million over the same period, and the raw percentage of Americans working has basically flatlined at 58.5 percent. To the extent there are new jobs, it has more to do with the fact that there are more people creating more demand, not with any fundamental expansion in the economy.

This raises the question why the unemployment rate continues to improve. The answer is that the “official” workforce is shrinking. Only those working or actively seeking employment “count” in the unemployment statistics. The discouraged, the dropouts and those who don’t even bother trying to find work aren’t included in the official unemployment rate. The 30-year average participation rate - that is, the percentage of Americans in the workforce - is 65.8 percent. During the last three years, this number has fallen sharply to around 64 percent. While the potential worker population rose last year by 1.7 million, the official workforce only went up 275,000. Counting like that makes it easier to report better employment numbers.

An analysis posted last week at the Zero Hedge website looked at what the unemployment picture would be if participation rates were held steady. Using more realistic long-term average participation rates, the study calculated a current unemployment rate of 11.4 percent. While the Obama administration’s numbers keep getting better, rates based on long-term participation do not. Factor in the number of Americans who hold down two or three jobs just to get by, and those who are chronically underemployed make the picture even grimmer.

It’s twisted that President Obama benefits from a flawed formula that generates a positive outcome when frustrated potential workers simply give up. This is what passes for progress in the jobless economy. A lower official unemployment statistic makes a good headline and a good talking point, but it would be better if more Americans were actually finding good jobs. The Zero Hedge analysis notes that by extending the logic of reporting progressively fewer labor-force participants, “America will officially have no unemployed when the Labor Force Participation rate hits 58.5 percent, which should be just before the presidential election.” Sounds like excellent timing, which exposes what the government statistics are intended to do: Get Barack re-elected.

The Washington Times

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