The Unemployment Rate[1]
lies, damned lies, and statistics
Officially, 8.3 million Americans are unemployed (5.3% of the labor force)—in reality, 22.81 million are (13.3%). The official number is not even in the right ballpark. This is a national emergency.
Here is the proof.
The unemployment rate is calculated by a government agency called the Bureau of Labor Statistics (BLS). They begin by taking America’s total population and subtracting everyone under sixteen years old, everyone in the military, and everyone who is “institutionalized” (in jail, asylums, or old folks homes). This gives them the non-institutional population, which is everyone who can potentially work.
This population is then divided into two groups: the civilian labor force and those not in the labor force (everyone without jobs, who does not want one). The labor force is then sub-divided into employed (everyone with jobs, who want jobs) and unemployed people (everyone without jobs, who want jobs). The unemployment rate is simply the percentage of people in the labor force who are unemployed. Officially there are 8.3 million unemployed Americans.
How did they screw up?
To be unemployed, you must actively look for work. In other words, if you stop sending out resumes or contacting employment agencies, you drop out of the labor force, and are no longer technically unemployed—even if you stopped looking for work because there was no work.
This leads to some ridiculous distortions. For example, pretend you live in a small town whose livelihood is tied to the local factory. One day the factory shuts down and half the town loses their jobs. If these people do not bother looking for work (because there is no work), then they are not officially unemployed—they drop out of the labor force. Poof. No unemployment, even though a whole town is starving to death.
These are America’s invisible people.
America’s ghosts
The question is, how many people are falsely excluded from the labor force? A lot.
To its credit, the BLS tries to account for this problem with its U-6 Unemployment Rate, which includes the 8.3 million officially unemployed people, plus 6 million involuntary part-time workers (people forced to work part-time because there is not enough work), and 1.7 million “marginally attached” workers (people who looked for work sometime in the last year).[2]
This brings the real unemployment rate up to 9.7%, or 16 million people—almost double the official rate.
But that is not all.
The BLS tracks why people drop out of the labor force in a comprehensive national survey. In 2015, 1.7 million people said they dropped out for “other reasons”. Curious as to what these reasons were, I did some digging. Turns out that 1.5 million of those people said they stopped looking for work because there was no work. Apparently “other reasons” is the corrupt government’s code word for “the economy sucks”. [3]
This brings the running total up to 17.5 million unemployed people.
On top of that, millions of Americans claimed they dropped out of the labor force because they went “back to school”. Great, if it were true. But it is not.
When we check labor force dropout rates against actual school or college enrollment numbers, the results are staggering. For example: in 2014, 31% more teenagers (16-19) claimed they could not work because of school than in 2004. [4] However, school enrollment only increased by 1%. The same is true for young adults (age 20-24): in 2014, 28% more of them claimed they could not work because they were going to college than in 2004, but post-secondary enrollment only increased by 8.4%.[5]
Unless young people stopped skipping class or drinking, and started studying like never before, it is safe to assume most of them stopped working because there were no jobs. So many bright, young people are being denied their chance to make their own way in life, to learn the value of a hard day’s work, to get their hands dirty at a tough job—no wonder socialism is on the rise.
This accounts for another 3.35 million people, which brings the running total up to 20.85 million unemployed people.
Another major category that distorts the picture are disability claimants. In 2014, fully 31.5% more people said they could not work because of disabilities, but the number of disabled people only increased by 13.6% (according to Social Security). [6] In effect, the jobs market is so bad, that 1.96 million people with (sometimes minor) disabilities have been squeezed out of the labor force. Many are now chronically unemployed, while others live off government handouts.
This brings our final total up to 22.81 million unemployed Americans (13.3%). That is not even close to 8.3 million. The government lies.
Keep in mind this does not include people who retired early because they could not find work, nor does it include people who are underemployed (think of all those people with college degrees working at Starbucks). For America to work, Americans must work.
Until then, this is a national emergency.[7]
[1] Unless otherwise stated, employment data is from: Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey,” & United States Census Bureau, “Population Estimates: National Totals.”
[2] Federal Reserve Bank of St. Louis. “Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons (u6RATE).”
[3] Hipple, “People Who Are Not in the Labor Force: Why Aren’t they Working?” Footnote 3.
[4] Ibid. 5.
[5] Ibid. 6.
[6] Social Security Administration. “Selected Data from Social Security’s Disability Program.”
[7] I should also note that the labor force participation rate is (the percentage of the non-institutional population in the labor force itself) is precipitously low. As of 2015 it was 62.7%, down 5% from its peak in 2000. In fact, it is the lowest it has been since 1977, the era of stay-at-home moms and little pink houses.
In raw numbers, the people not included in the labor force increased from 75.95 million in 2004, to 93.67 million in 2015, a 21.15% increase. Part of this can be explained by overall population growth, which totaled 8.59% (although the category still outpaced natural growth by a multiple of 2.5). Likewise, a greying population accounts for only a small share: while the percent of Americans over 65 increased from 12.4% to 14.5% in the period, the percentage of elderly people retiring decreased by about 30%. As a result, the increasing “not in labor force” population is not an issue which can be explained away using the conventional political excuses: it is a real problem that demands action.
See: United States Department of Health and Human Services. “Census Bureau Population Estimates as of July 1, 2004.” & United States Census Bureau, “Quickfacts, United States” & Bureau of Labor Statistics, “Employment Projection.”