Unemployment Rate Falls Due To Workforce Contraction
The November unemployment report is out, and it’s one of those good news / bad news deals. Well, actually, it’s more like horrible news that will be spun as good news. The economy created 120,000 jobs in November, and the official unemployment rate fell to 8.6%, which is a two-year low… but the drop was mostly due to 315,000 people leaving the workforce entirely.
In other words, it’s weight loss through amputation. Congratulations, you lost fifteen pounds of unsightly flab overnight! The bad news is, we got your weight down by cutting off your arm.
You don’t need me to assemble a roundup of big media sources to know that all of the headlines simply declare “Unemployment Rate Falls to 8.6% In November,” or something along those lines. They also mention either 120,000 jobs being added, declare this to be the lowest unemployment rate since 2009, or both. The huge drop in workforce participation – a bit shy of three times the number of jobs added – is buried somewhere in the story. Just for fun, I checked out the Washington Post, New York Times, CNN, MSNBC, ABC, CBS, and Fox News. Only CBS mentioned the contraction of the labor pool, in a sub-head.
CNN simply cried, “Jobless rate plummets!” If readers bother to click past the headline, they will learn this:
Employers added 120,000 jobs in November, the Labor Department reported Friday, marking a pick-up in hiring from October.
Meanwhile, the unemployment rate fell to 8.6%, due to a combination of more people getting jobs, as well others giving up on their job search altogether.
Economists surveyed by CNNMoney had expected an additional 110,000 jobs in the month, and the unemployment rate to remain unchanged.
(Emphasis mine.) That’s rather intriguing, isn’t it? The “experts” were basically right about job creation, but they also thought the unemployment rate would remain unchanged. How could that be? It’s because the actual employment picture has barely changed at all – 110,000 or 120,000 new jobs is well short of the roughly 200,000 jobs needed to keep pace with population growth – but the size of the workforce is what “plummeted.” This is not a complex or arcane point, and for major media outlets – including Fox News – to leave it out of their headlines is both predictable and inexcusable.
In the body of the Fox News report, the situation is described as follows:
The unemployment rate fell to 8.6 percent in November, a number that offers the Obama administration a rare piece of good economic news — but also masks a startling shift in the job market.
The Labor Department said Friday that employers added 120,000 jobs last month. With that, the unemployment rate dropped to the lowest level in more than two and a half years. But a key reason for the sharp drop was that about 315,000 people had stopped looking for work — for the Labor Department’s purposes, they were not counted as unemployed.
Why would any rational person consider that “a rare piece of good economic news” for the Obama Administration? The semi-permanently unemployed underclass just grew by 315,000 souls. That’s only “good news” if you assume Obama is deliberately trying to tear down the private sector and make the hopelessly dependent underclass larger. Shall we officially drop all pretense of believing otherwise?
It’s also a bit insulting that we’re expected to celebrate 8.6% “cooked” unemployment. (The true U-6 metric, which counts people who are “marginally” attached to the work force but haven’t dropped off the radar completely after a full year of despair, is 15.6%) Of course, if a true recovery were under way, we’d pass through 8% and 7% on our way back to Bush employment levels, and it would be cause for optimism. That’s why it’s a very salient fact that the “sharp drop in unemployment levels” for November came almost entirely from workforce contraction. That shouldn’t be a sub-head adjustment to upbeat headlines. That is the headline.
Update: Michele Bachmann gets it. She just released a statement about the new unemployment numbers:
Today’s 8.6 percent unemployment number gives the appearance that the jobs situation is improving, and while I’m sure the president will attempt to take credit for it, unfortunately he won’t explain that the lower numbers are being propped up by huge numbers of Americans dropping out and giving up on trying to find a job. The labor participation rate dropped again to a tragically low percentage.
My heart breaks as we approach the holidays for American families who have been abandoned by this president so that he can implement his radical agenda. I have lived in poverty and I know how hard it is. As president, I will stand by all Americans, unite this country, and never let any person who wants a job lose hope.
Update: I notice Fox News rather dramatically changed their web headline for the unemployment report. It now says “Good News Hiding Bad?” and prominently mentions the workforce contraction.