Understanding Unemployment and Labor Participation Numbers

February 8, 2014

It is not amazing to me that the American public does not understand unemployment numbers and the meaning behind what few number and statistics they are given. The government and the media in my opinion go to great lengths to avoid telling you the truth. The government and particularly this administration certainly refuse to tell you the truth for obvious reasons other than the fact this president is a habitual liar but the media refuse to as well. You may ask why would the media refuse to tell you the entire story as well; because most of the media is nothing more than a subchapter of the DNC for one but also the government puts enormous pressure on the media to avoid telling you the truth, and the government conveniently under Jimmy Carter changed the way they report unemployment numbers precisely to cover the horrible unemployment numbers produced by that worthless president.

In short; NO ONE will tell you the truth about the true unemployment numbers nor will they explain to you the relationships between the U-1, U-2, U-3, U-4, U-5, U-6 numbers.

But one really only needs to go to the U-3 and U-6 tables, and then look at the Labor Participation tables to understand what the real unemployment numbers are and how truly horrible they are at this time.

First allow me to give you the down and dirty on each: 

U-3 report: U-3 Total unemployed, as a percent of the civilian labor force (official “reported” unemployment rate) 

U-6 report: U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.

Labor Participation Rate:

A measure of the active portion of an economy’s labor force. The participation rate refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate. During an economic recession, many workers often get discouraged and stop looking for employment, as a result, the participation rate decreases.

The participation rate is an important metric to note when looking at unemployment data because unemployment figures reflect the number of people who are looking for jobs but are unable to secure employment.

The participation rate is important in analyzing the unemployment rate. Those who have no interest in working are not included in the participation rate but are included in the unemployment rate. An aging population can have both a positive and negative effect on the participation rate, through retirement and new people entering the workforce. The participation rate and unemployment data should be observed in tandem to give a better understanding of the overall employment status.

Perhaps it would be a good idea to go back and re-read the Labor Participation Rate definition again as it is critical to understanding unemployment. (Hereafter I will refer to the Labor Participation Rate as LPR)

For us to completely understand the unemployment numbers and how the LPR affects it we are going to create a fictitious country with a total citizenship of One Hundred Thousand. We will name our country the USR (United Socialist Republic since that is what America is becoming)

So let’s first break down the numbers.

• 100,000    total citizens
  
• 20,000     are senior citizens
  
• 20,000     are youth (age 1-18)

So we have a grand total of 60,000 individuals left between the ages of 18-65 who are willing to work, able to work, and capable of working.

Assuming all 60K want to work AND ARE working you would have a LPR of 100% which would be awesome.

Now assume 5,000 people do not want to work or cannot find employment so they simply give up looking and drop out of the workforce all together. Now you only have a total of 55,000 willing, able, and actively working individuals.

So what does that give us? A LPR of 91% which is still very good.

Now let’s assume that 20,000 people drop out of the labor force. That would then be equal to a 66.6% LPR.

This is critical to understanding prior to simply just looking at the bogus unemployment numbers the White House and the media give you why; because the government simply and conveniently removes people from the unemployment figures once they completely depart from the labor force either because they don’t want to work, they can’t find work, or they simply gave up looking for work, or the worst category; you government promotes NOT working through our welfare state all of which are the case here in America today.

America now has the lowest LPR in over 35 years since the Carter administration with over an astonishing 91 Million who have just dropped out of the labor pool.

Record LPR lows

http://www.zerohedge.com/news/2014-01-10/people-not-labor-force-soar-record-918-million-participation-rate-plunges-1978-level

Records for the lowest Black LPR

http://nation.foxnews.com/2014/01/13/black-labor-force-participation-rate-under-obama-hits-rock-bottom-%E2%80%93-lowest-level-ever

LPR hits all-time lows thanks to people dropping out of the labor pool

http://www.cepr.net/index.php/data-bytes/jobs-bytes/jobs-2014-01

No matter how the left and the media want to spin this it is a very bad situation!

So how does this affect unemployment numbers and why should you care? Because the unemployment numbers are not real they are skewed. It is important to be reminded and understand the numbers that the government reports ARE NOT ACCURATE. If you do not count those who have just given up looking for work and who have completely dropped out of the labor pool the numbers are simply a lie to cover up the truth. Again this started under Carter when he did not want the real numbers coming out.

So now let’s look at our country (USR) and our 100,000 people and unemployment. 

• 100,000  Total
  
• -20,000 Seniors
  
• -20,000 Youth
  
• Equals 60,000 available to work.

I am keeping this in its simplest form for everyone’s ability to understand. There are other factors such as individuals with true disabilities, and stay at home mothers for example. They are not factored into our equation but in reality they are. I am going to leave those all out in order to keep it simple for now.

So we are going to assume that we in fact have 60,000 able bodied individuals who want to work.

60K minus 5,000 who have lost employment etc.. Equals basically 1% unemployment 

60K minus 10,000 who have lost employment etc.. Equals basically 16% unemployment

60K minus 20,000 who have lost employment etc.. Equals basically 33% unemployment

60K minus 30,000 who have lost employment etc.. Equals basically 50% unemployment

Let us go back and use the 60K minus 20,000 which equals 40,000 able bodied working adults at an unemployment rate of 33%.

Question: What happens to that number (33%) if 5,000 of the 20,000 who were unemployed now just drop out of the labor force because they just gave up?

At this point you originally HAD 60K able bodied workers but now only 15,000 unemployed due to the fact that we (the USR government) no longer counts 5,000 of those people anymore even though they SHOULD be counted as they are still considered “able bodied”.

60K minus 15,000 Equals 45,000 working adults which now translates into 25% unemployment. That is a magical drop of 8% in the unemployment rate! Pretty damn amazing isn’t it?

This is EXACTLY how your government manipulates the unemployment numbers. Ask yourself how in the final 3 months of the last presidential election when essentially no jobs were being created there was a miraculous drop in unemployment. It certainly wasn’t because of job creation! In fact the United States economy needs a job growth rate of about 250,000 new jobs JUST to keep up with population growth and we haven’t seen that in 7 years. So how did this miracle happen?

Simple; the Obama administration conveniently just dropped 2 million plus out of the work force (i.e. LPR) which meant the unemployment numbers dropped. In addition, in October 2008 the last reported month prior to the election California for some mysterious reason “just couldn’t seem to get their unemployment numbers to the Labor Department” hmmmmmmmmmm???

Another frekin miracle!!

In reality, the real unemployment rate if you utilize the U-6 report which is the ACCURATE or I should say much more accurate unemployment rate we are sitting at an astounding 13+% unemployment rate nationally.

Reference this report by the LIBERAL CNBC (shockingly they actually told the truth for once)http://www.cnbc.com/id/101326426

http://cnsnews.com/news/article/barbara-boland/real-unemployment-138

America has lost over 9 Million jobs since Obama took office (not to be confused with the 91 million who have just dropped out of the labor force). These jobs have vanished – poof gone in 72 months that is an average of 125,000 jobs vanishing each and every month.

America now has a record 91.8 Million people NOT in the labor force out of a country of about 320 Million people. This is the lowest LPR in 35 years. In 1978 the LPR was 63% now we are sitting at 62.8% which is simply stunning.

Making matters worse thanks to atrocious bills like the Unaffordable Care Act, and Frank & Dodd we are now a part-time nation. Meaning all the employment that is being created are part time jobs. People are losing their jobs or being dropped into the part time ranks by the thousands in order for their companies to survive.

This is not a recipe for a successful economy. 91 million simply not working and all the rest are either losing employment or being down-graded into part time employment.

Reference:

http://cnsnews.com/news/article/terence-p-jeffrey/90609000-americans-not-labor-force-climbs-another-record#sthash.dWliyTak.dpuf

Think about this; as people drop out of the work force more people are put on government assistance (i.e. welfare) and who pays for that. The people who are left working through taxes. So what happens when you have more people sucking off government welfare than are actually working and producing?

Things that should make you go hmmmmmmm!