The number of people who are not counted in the BLS labor force soared by 522,000 in April 2012 as compared to March. This number rose from 87,897,000 (March '12) to 88,419,000 (April '12) and is shown in the St. Louis Federal Reserve Chart above.
As a result, the LPF (Labor Force Participation Rate) is now the lowest since 1981, and is shown in the top chart above entitled: "Labor Participation Rate". The labor participation rate is defined as the percent of Americans working, out of total available labor work force, and is 64.3%, the lowest point in the last 30 years. 88.4 Million Americans are not working out of a total US adult population of about 190 Million.
The drop in the number of people in the labor force, combined with the adding of 115,000 new jobs, resulted in a 0.1% drop in the unemployment rate (from 8.2% in March to 8.1% in April). 80%, or 4/5 of the drop in the unemployment rate from the peak is due to people leaving the workforce, according to U of Maryland economist Peter Morici.
Unemployment is calculated by dividing a numerator "U" (total number of people who are unemployed) by a denominator "D" (number of people who are in the labor work force). Hence unemployment drops if the numerator drops, which happens if new jobs are created. But the numerator also drops, along with the unemployment rate, if the numerator is artificially made smaller, such as by removing some actual unemployed people from being listed or counted as unemployed, as the BLS currently does.
The current BLS method is based on the number of people eligible for unemployment benefits. The current BLS method does not count all Americans who are unemployed, yielding an artificially low percentage for the unemployment rate. People get dropped from being counted as unemployed when their unemployment benefits run out (after 99 weeks, currently), or when they stop looking for work and thereby become ineligible for unemployment benefits.
A comparison of the BLS unemployement rate with the real unemployment rate is shown in the above chart, entitled "Reported and Implied Unemployment Rate and Difference". The current BLS unemployment rate: 8.1%. The actual real unemployment rate is 11.6%.
The BLS (U. S. Bureau Of Labor Statistics) unemployment rate was 7.8% when Obama became President in January of 2009. It reached a high of 10.1%, and has fallen to the current value of 8.1% at the end of April, 2012.
115K new jobs were created in April '12, as compared to 154,000 jobs created in March '12. 7.8 Million Americans are part time workers.
The unemployment rate has exceeded 8% for 39 consecutive months, longer than the previous record of the Great Depression. Note that during the Great Depression in the 1030's the unemployment rate was calculated based on the total numer of Americans that were unemployed. The peak unemployment rate during the Great Depression was 25%. However, today we have 15 million Americans who are unemployed, which is more people that were unemployed in the worst days of the Great Depression.
The BLS unemployment rate would be 8.4% today if the same number of people were working in April as were working in March. It would be 11% today if the same # people were working today as were working when Obama became President in January of 2009.
The productivity (output divided by number of hours worked) of American workers fell in April by the largest amount in a year.
But never mind...
Let us instead celebrate:
1) The one year anniversary of the death of Bin Laden.
2) The fact that (per Bill Clinton's video ad) that Obama avoided a simply dreadful political liability which would have occurred had any Seal Team 6 personnell had been injured or killed in the mission. (Note that in this case the Seal Team 6 members would also have suffered liability had that occurred).
3) That Obama has a way forward to getting re-elected, namely by encouraging more people to drop out of the labor force, thererby emoving themselves from being counted as unemployed, and so helping the President's re-election chances by lowering the unemployment rate in this, admittedly perverse, manner.
No comments:
Post a Comment