The concern is that, while the numbers are accurate, the graphic indicates that the current unemployment level of 8.6% is roughly the same or higher than 9%.
Unfortunately, none of the sites have any information about the information input into the chart, or the context surrounding it, but I have to agree; on the face of it, the chart looks pretty bad.
But it did get me to thinking. While the administration claims that unemployment has declined sharply over the past few months, I really don't see much change in my day to day life. I still have my job, but the folks I know who don't have a job are still struggling to find one. So I decided to take a closer look at the numbers and see what is really going on.
First, I went to the Bureau of Labor Statistics to pull some raw data. I went to the Current Population Survey page and found the following.
Unemployment Rate: 8.6% in Nov 2011
Change in Unemployment Level: -594,000 in Nov 2011
Change in Employment Level: +278,000 in Nov 2011
Change in Civilian Labor Force Level: -315,000 in Nov 2011
Civilian Labor Force Participation Rate: 64.0% in Nov 2011
Employment-Population Ratio:58.5% in Nov 2011
I noticed a couple of things right off. First, while there were 594,000 people removed from the jobless ranks, only 278,000 new jobs were created, meaning that 315,000 people left the workforce completely, and were no longer counted in the unemployment rate.
That's 10,000 people a day who are no longer part of the work force. Let's put that into perspective. The Knoxville Metro area has a labor force of roughly 300,000 people. That's everyone working in Knox, Anderson, Bount, Union, and Loudon Counties. Do we really think that enough working people to fill the five counties listed retired in one month?
Okay, that just doesn't sound right to me so I dug deeper.
I pulled a chart showing the labor force participation rate:
Series Id: LNU01300000
Not Seasonally Adjusted
Series title: (Unadj) Labor Force Participation Rate
Labor force status: Civilian labor force participation rate
Type of data: Percent or rate
Age: 16 years and over
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2001 66.8 66.8 67.0 66.7 66.6 67.2 67.4 66.8 66.6 66.7 66.6 66.6 66.8
2002 66.2 66.6 66.6 66.4 66.5 67.1 67.2 66.8 66.6 66.6 66.3 66.2 66.6
2003 66.1 66.2 66.2 66.2 66.2 67.0 66.8 66.3 65.9 66.1 66.1 65.8 66.2
2004 65.7 65.7 65.8 65.7 65.8 66.5 66.8 66.2 65.7 66.0 66.1 65.8 66.0
2005 65.4 65.6 65.6 65.8 66.0 66.5 66.8 66.5 66.1 66.2 66.1 65.9 66.0
2006 65.5 65.7 65.8 65.8 66.0 66.7 66.9 66.5 66.1 66.4 66.4 66.3 66.2
2007 65.9 65.8 65.9 65.7 65.8 66.6 66.8 66.1 66.0 66.0 66.1 65.9 66.0
2008 65.7 65.5 65.7 65.7 66.0 66.6 66.8 66.4 65.9 66.1 65.8 65.7 66.0
2009 65.4 65.5 65.4 65.4 65.5 66.2 66.2 65.6 65.0 64.9 64.9 64.4 65.4
2010 64.6 64.6 64.8 64.9 64.8 65.1 65.3 65.0 64.6 64.4 64.4 64.1 64.7
2011 63.9 63.9 64.0 63.9 64.1 64.5 64.6 64.3 64.2 64.1 63.9
The chart shows that the participation rate declined after 9/11, began to rebound in 2006, then crashed hard in 2008. The current average of 64.1% is the lowest since 1982 and 1983.
Now, this could represent a population change, so the next thing I looked at was the size of the employed population as compared to total population.
Series Id: LNU02300000
Not Seasonally Adjusted
Series title: (Unadj) Employment-Population Ratio
Labor force status: Employment-population ratio
Type of data: Percent or rate
Age: 16 years and over
Download:
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2001 63.7 63.8 64.0 63.9 63.9 64.1 64.2 63.5 63.4 63.4 63.1 63.0 63.7
2002 62.0 62.5 62.5 62.6 62.9 63.1 63.2 63.0 63.0 63.0 62.5 62.4 62.7
2003 61.8 62.0 62.1 62.3 62.3 62.7 62.6 62.4 62.1 62.4 62.4 62.3 62.3
2004 61.6 61.8 61.9 62.1 62.3 62.7 63.0 62.7 62.4 62.6 62.6 62.4 62.3
2005 61.7 61.8 62.0 62.5 62.7 63.1 63.4 63.2 62.9 63.2 62.9 62.8 62.7
2006 62.2 62.3 62.6 62.8 63.1 63.5 63.6 63.4 63.2 63.6 63.5 63.5 63.1
2007 62.6 62.6 62.9 62.8 63.0 63.4 63.5 63.0 63.0 63.1 63.2 62.8 63.0
2008 62.2 62.1 62.3 62.6 62.5 62.8 62.8 62.3 62.0 62.0 61.6 61.0 62.2
2009 59.8 59.6 59.5 59.8 59.6 59.8 59.8 59.3 58.9 58.8 58.8 58.2 59.3
2010 57.8 57.9 58.2 58.7 58.7 58.9 58.9 58.8 58.6 58.6 58.4 58.3 58.5
2011 57.6 57.8 58.1 58.4 58.5 58.5 58.6 58.5 58.5 58.7 58.7
Here, we see that the percentage of people with jobs dropped precipitously in July 2008 as compared to the total population, indicating that millions of jobs just disappeared, and so far, have not returned. The people doing those jobs are still unemployed, but apparently, they've been unemployed for so long that they just don't count any more.
That 8.6% isn't looking as good now. I mean, it looks good for Obama, but if you are one of the folks who are still unemployed, but not counted, well, the outlook is pretty grim.
For fun, let's see what happens if we figure the unemployment rate based on the number of people actually out of work?
The first thing we have to do is look at the size of the labor force. Again, the BLS is very helpful:
Labor Force Statistics from the Current Population Survey
Series Id: LNU01000000
Not Seasonally Adjusted
Series title: (Unadj) Civilian Labor Force Level
Labor force status: Civilian labor force
Type of data: Number in thousands
Age: 16 years and over
Download:
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2001 142828 143100 143664 143026 143023 144553 145097 143826 143601 144060 143987 144042 143734
2002 143228 144266 144334 144158 144527 145940 146189 145565 145167 145320 144854 144807 144863
2003 145301(1) 145693 145801 145925 146067 148117 147822 146967 146166 146787 146969 146501 146510
2004 146068(1) 146154 146525 146260 146659 148478 149217 148166 147186 147978 148246 147877 147401
2005 147125(1) 147649 147745 148274 148878 150327 151122 150469 149838 150304 150239 149874 149320
2006 149090(1) 149686 150027 150209 150696 152557 153208 152465 151635 152397 152590 152571 151428
2007 151924(1) 151879 152236 151829 152350 154252 154871 153493 153400 153516 154035 153705 153124
2008 152828(1) 152503 153135 153208 154003 155582 156300 155387 154509 155012 154624 154349 154287
2009 153445(1) 153804 153728 153834 154336 155921 156255 154897 153617 153635 153539 152693 154142
2010 152957(1) 153194 153660 153911 153866 154767 155270 154678 153854 153652 153698 153156 153889
2011 152536(1) 152635 153022 152898 153449 154538 154812 154344 154022 154088 153683
Wow. Our labor force is actually contracting! This surprised me so I expanded the range of the data to see if we had ever seen anything like this, a two year decline in the size of the labor force.
And the answer is no.
Think about that for a minute folks. Since 1948, the size of our work force has steadily increased yet for the last two years, it suddenly stopped growing and started contracting.
There are two potential explanations for this. The first is that our population is actually shrinking. The US Census says no. The second is that somebody is cooking the books.
Regardless of the explanation, we need to determine what the size of the labor force should be if we were following historical trends. Regression analysis (I love excel!) using data from January1978 though January 2008 shows that on average, the labor force should increase in size at an annual rate of 1.7 million workers. Applying that to the 2008 data indicates that the US labor force should actually be around 158 million people. BLS statistics show us at 152.5 million, 300,000 fewer than in 2008.
That's 5.5 million people missing from the work force. 5.5 million people that are not being counted in our unemployment statistics.
So, the BLS says that 12.6 million are unemployed. which results in an unemployment rate of 8.6% if you accept their numbers, i.e., that for the first time in over 60 years, our workforce has shrunk instead of grown. If you apply the historical average, then we have roughly 18 million people out of work, for a real unemployment rate of 12.3%
Yeah, I know. This is hypothetical, based on an inference from historical data. I haven't proven that somebody is cooking the books, but look at that last chart again. 60 years of nearly perfectly linear growth that suddenly stops and actually contracts in 2009. We've been through recessions before. We've been through market crashes and wars and civil unrest. But in over 60 years, we've never seen our work force dip over a two year period like we have in these numbers.
People keep on having babies, and they keep growing up. People continue to immigrate to the US, and our work force continues to grow. The employment to population ratio proves that we haven't stopped growing. But somehow, we're not adding workers to the labor force.
Folks, look at the numbers for yourself. See if what you are being told makes sense to you when you look at those numbers. Don't believe it because I say so; take a look for yourself. The information is right there.
