Friday, February 4, 2011

Dig that crazy math: Unemployment drops to 9%, only 36,000 jobs created

Only government could devise a way to count the unemployed so that despite there being virtually no new jobs created, the unemployment rate still declines.

That is exactly what appears to have happened during the month of January.
Bloomberg:  The U.S. jobless rate unexpectedly fell in January to the lowest level in 21 months, while payroll growth was depressed by winter storms.
Unemployment declined to 9 percent from December’s 9.4 percent, the Labor Department said today in Washington. Employers added 36,000 workers, short of the 146,000 median gain projected by economists in a Bloomberg News survey. [MORE]
So how can the unemployment rate decline so sharply with almost no new jobs being created? Simple, the government stops counting people as unemployed once they give up looking for work, as well as when they actually find work.
Frankly, this doesn’t make a lot of sense. If only 36,000 jobs were added and 600,000 people stopped being unemployed, then the labor force should show a significant contraction. The lower overall rate makes sense if 600,000 people left the workforce, but not if the workforce remained the same. Otherwise, we’d have to conclude that 36,000 jobs represents 0.4% of all employment in the US.
Looking at the A-6 table, which compares numbers January 2010 to January 2011 (not seasonally adjusted), we can see that the unemployment rate for those without disabilities has dropped from 10.4% to 9.7%. The number of non-disabled adults outside the work force has grown substantially in that period, from 62.8 million to 64.7 million. That far outstrips population growth and indicates that people are still leaving the work force in large numbers. In the A-16 table for the same period (not seasonally adjusted), the number of people outside the workforce has grown from 83.9 million to 86.2 million, again showing a large increase.
The topline rate number looks better, but it also looks increasingly irrelevant. The Department of Labor shows that the average monthly growth of jobs over the last 12 months has been 97,000, not enough to keep up with population growth. That’s the key measure, and it’s simply not getting any better, nor any more consistent. [MORE]
The administration will no doubt tout the decline (even if it is crazy math).  The danger for the administration is that risk appearing very out of touch. This is because unemployment is a real thing that can be quite painfully felt and pointing to a bunch of facts and figures won't make that pain go away.

Via: Hot Air


Janelle said...

Know this is off topic, but I am really sick of looking up at this man's nostrils. Sport, we aren't the least bit interested in your inner nose. But the fact that you don't know that is more than revealing.

madmath1 said...

What about graduates that have just entered the work force, but haven't had a job yet to be counted as they only count those collecting unemployment as actually being unemployed. What about the 99ers (or how long they let them go on) that had their expired? Did they magically get employed? What frightens me now is that my boss is going to retire at the end of next year and at the age of 47, I will unemployable (let's face it, no employer, even government unless I'm black or hispanic, isn't going to hire a person, especially a white male, of that age) does that mean I'll count for the weeks that they allow me to draw and then I'll just disappear? Scary thought.

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