State of Mankind

A New Way Of Thinking

The Unemployment Rate

“Numbers never lie, but liars always use numbers.” (Anonymous)

I was reading the unemployment numbers that came out Friday, and they seemed a little odd. We apparently added 120,000 jobs and the unemployment rate dropped from 8.3 to 8.2%.  Knowing that 120,000 jobs isn’t enough to drop the unemployment rate, I began searching for how the numbers are formulated.  I found some answers at:

http://www.zerohedge.com/news/nfp-big-miss-120k-expectations-205k-unemployment-82

and: http://www.zerohedge.com/article/birthdeath-adjustment-was-responsible-over-50-payroll-gains-past-year.

For those who want the easy rundown, the drop in the rate is due to the number of workers NOT IN THE LABOR FORCE being at an all-time high at nearly 88 million.  This is the number of workers who are not counted as unemployed because they have given up trying to find a job.  This number has steadily risen since 2007 when it was at 79 million.  Looking only at the 9 million added to this number since 2007, that is enough people to push the rate up to around 11%.  Translation:  Our unemployment numbers look better if people are too discouraged to look for a job.

The next factor that fudges the numbers is the birth/death adjustment.  This is somewhat complex, but explained in the second link above for the studious.  For everyone else, the net sum of it is that 90,000 of the 120,000 jobs added were simply a statistical trick.

To put a good spin on this news, perhaps this tough time economically will help all of us to be more grateful for what we have, and come to have more love and compassion for our neighbors who are struggling.

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