These government reports are ridiculous and so are the experts who try to interpret them as positive. These recent jobs reports show we lost jobs, and yet the unemployment rate drops. How is that possible? Simple, you just don’t count everyone by saying the unemployed have stopped looking for jobs.
For goodness sakes, the biggest states in our union such as California and New York don’t have enough revenues to balance their budgets and have threatened to pay every state government worker minimum wage or be laid off. How long will the government keep playing these games. They spent trillions of dollars on stimulus packages to create jobs and claim they have made millions of them, but have no evidence to support it with the exception of the temporary census jobs.
So why did the unemployment rate drop if we lost jobs? Well it didn’t really drop in real terms, but if you don’t count everyone you can manipulate the report to say it.
The unemployment rate fell in June to 9.5% from 9.7%, reaching its lowest point since last July. But the decline wasn’t due to improvement in the labor market. Instead, jobless Americans dropped out of the labor force in droves.
June’s decline in the civilian labor force of 652,000 was the sharpest one-month decline in 15 years in the Labor Department’s survey of households. Some people could be frustrated with their job searches, choosing to take time off or pursue other options like school. Some could be experiencing the end of their unemployment benefits, which required them to maintain an active job search. Whatever the cause, over the past two months almost one million people simply stopped looking for work. And over those two months, the U.S. population grew by 361,000 — with more than half of that gain coming in June.
The drop of 125,000 jobs in the monthly payroll report, which is compiled from a separate survey of employers, should have led to an increase in June’s jobless rate. The economy generally needs to add at least 100,000 jobs a month — often more — just to keep up with growth in the labor market and keep the unemployment rate steady. In June, people giving up hope and leaving the job market offset that need for more jobs to keep the jobless rate even.
What happens when all those people return? The unemployment rate is a measure of the total number of unemployed people — defined as those out of work but looking for work — as a share of the overall labor force. Once the economy improves, many of those people will restart their job searches and expand the labor force again.
If employers aren’t producing enough jobs to satisfy all that available labor — they probably won’t be — then the overall unemployment rate will rise again. The recent drops in consumer confidence and the recent pace of hiring suggests many Americans won’t be rushing back into the job market soon. That will mean continuing downward pressure on wages — and little underlying inflation.
Malin Akerman
Mila Kunis
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