Unemployment rate falls; number of unemployed stays the same
If it looks like there’s something weird in today’s unemployment announcement, that’s because there is. While the U-3 unemployment rate has declined slightly, to 7.7 percent, that doesn’t seem to reflect an increase in the number of Americans who are actually working.
In fact, labor force participation, the more important statistic for American workforce measurements, is down slightly. The unemployment rate looks better because it’s being measured against a smaller denominator. At Eagle Daily Investor, which is owned by the parent company of Human Events, Paul Dykewicz explains why it’s important to look beyond the headline statistic:
Total non-farm payroll employment gains were revised down for October from +171,000 to +138,000 and for September from +148,000 to +132,000.
Even if we assume the numbers were not manipulated for political reasons and that the U.S. Bureau of Labor Statistics is insulated from such pressures, the reduced employment numbers for October and September naturally raise the question about whether the 146,000 new non-farm jobs reported to have been created in November will be reduced downward in the months ahead, too.
With monthly employment growth averaging 151,000 since the start of the year, falling below the average of 153,000 a month in 2011, the November non-farm job gains show a clear loss of job-growth momentum.
Also in November, 2.5 million persons were “marginally attached” to the labor force, essentially unchanged from a year earlier. The data, which are not seasonally adjusted, reflect individuals who the federal agency described as not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. However, those people were not counted as unemployed because they had not searched for work in the four weeks preceding the survey, the Bureau of Labor Statistics explained.
The U-3 “headline” statistic has become an important bone of contention, and not only among unemployment geeks. One member of Congress has been trying to change the headline measure, on the argument that other Bureau of Labor Statistics measures are more informative. (They are, but all aggregate statistics are subject to a pretty horrifying level of error.) Jobless statistics can be made to say many different things, and the first four years of the Obama administration were very heavy on pettifoggery about the economic recovery which still hasn’t arrived. Wherever you stand on economic theory, when the monthly numbers come out you should always take a look at all six of the BLS statistics.