By Rick Manning –
One of the hallmarks of the Obama Administration’s “accomplishment” in changing the jobless rate has been the persistent mass exodus from the workforce by people who used to either work or look for it.
In the past year alone, Labor Secretary Hilda Solis’ own statistics show that approximately 2.16 million Americans are no longer in the workforce. Why is this significant?
Because these workforce dropouts are no longer counted when the Department of Labor releases their monthly unemployment rate data, and they are the primary reason why the unemployment rate appears to be going down dramatically.
This point is made even more obvious by the fact that the percentage of the population that is employed is actually lower now than it was a year ago, when the unemployment rate was at 9.7 percent. So, even with more than 2 million people not being counted, a lower percentage of the remaining workforce is actually employed, and the unemployment rate is down almost a full percentage point?
The only explanation is that the “decline” in the unemployment rate is wholly the result of the decision by more than 2 million Americans to collectively throw up their hands and give up on the U.S. economy rather than the result of stimulus driven job creation.
When I bring this point up on radio interviews, I often get asked about what these people are doing to make money, and the answer is I’m not sure.
It is clear though that a significant number of people are removing themselves from the measurable U.S. economy (87,000 dropped out of the workforce in the past month alone), and their actions speak louder than any proclamations from the Obama Administration about the rapidly dropping unemployment rate.
In fact, Tyler Durden on the site zerohedge.com writes, “Wonder why the unemployment rate is at an artificially low 8.9 percent? Three simple words: Labor Force Participation. At 64.2 percent, it was unchanged from last month, and continues to be at a 25 year low. Should the LFP return to its 25 trend line average of 66.1 percent, the unemployment rate would be 11.6 percent.”
Here is the chart for the Labor Participation Rate that Durden uses, note in this chart the plummeting labor participation rate is a bad thing:
The dropping labor participation rate reflects the crushed hopes and dreams of more than 2 million Americans who have given up on the American dream, opting instead for scrambling for economic survival around the edges of society rather than continuing to seek employment through normal economic channels.
It is clear that these newly minted non-workers, are at the very least, the difference between the Labor Department’s claimed 8.9 percent unemployment rate, and the Gallup organization’s measured 10.3 percent unemployment for the month of February.
In fact, over the past three months, Labor Secretary Solis has claimed a staggering drop of .5 percent in the unemployment rate, while Gallup measured an increase of .7 percent from 9.6 to 10.3 percent.
In the same three months, the Labor Department shows 406,000 people escaping being counted as part of the labor force.
Perhaps, Secretary Solis needs to get with the good folks with Gallup, and explain to them, that the best way to get the unemployment rate to a politically acceptable number is to lower the number of people you count as being in the labor market. With just a little nip here and tuck there, I’m sure the job situation can be given just the facelift it needs.
In fairness to the Administration, there are some positive signs from the latest job report that should not be ignored – the number of people who have jobs has increased, and the number of people who have been unemployed for less than five weeks has dropped significantly indicating that extending the tax cuts has had the effect of ending the job shedding in the economy.
While so much attention is paid to numbers, the reality is that on top of the 2 million real people who have left the workforce, another 8.3 million Americans are working in part time positions when they would prefer full time ones, and if you use Solis’ optimistic numbers, another 13.7 million can’t find any work at all. That’s 24 million of our neighbors who are struggling with less hope and lowered expectations for their lives and the lives of their children.
Sadly, Obama Administration officials are so disconnected from reality that they continue to claim this “recovery” as good news, when in fact it should be called the “Hope Lost Recovery.”
Rick Manning is the Communications Director of Americans for Limited Government and is a former Public Affairs Chief of Staff at the U.S. Department of Labor. Follow him on Twitter @rmanning957.
