Monday, April 9, 2012

Understanding the Unemployment Rate: March 2012

By Rick Manning

Once again, the unemployment rate dropped in March even though there are 31,000 fewer Americans employed than in the month of February.

This strange phenomenon where the government claims that 120,000 new jobs were created, yet fewer Americans are actually employed in those jobs is the result of the data being collected in two distinctly different surveys, and is just one more reason why the monthly unemployment rate no longer reflects the reality of America’s economic situation.

The truth is that 4.7 million Americans who have dropped out of the nation’s labor force are not being counted as unemployed, according to the government’s own data. If these labor force drop outs were counted in the ranks of the unemployed, the real unemployment rate would be 10.8 percent, instead of the claimed 8.2 percent.

This brief, updated, synopsis of some of the key elements of the true unemployment situation since Obama took office in January 2009 will provide a behind the numbers look at the real state of employment in America.

Each month, the Labor Department’s Bureau of Labor Statistics takes a survey snapshot of the nation’s employment situation in an attempt to determine the unemployment rate for the nation’s non-institutionalized civilian population.

While there are many interesting pieces to the unemployment rate puzzle, I have found the following four numbers most informative and enlightening: the non-institutionalized civilian population, the labor participation rate, the number of Americans who are employed and the number of people who classify themselves as “not in the labor force.”

There are obviously other very important statistics like the number of unemployed, which shows more than 12.7 million people who want a job and can’t find one. The scope of the number of people who are unemployed cannot be underestimated in terms of the human toll being created by Obama’s failed economic policies.

The reason that this number is not one of the four that I focus upon is that the number of unemployed does not include those who have dropped out of the labor force, so it significantly understates the scope of the unemployment problem in America.
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