Some Thoughts on the January Unemployment Number

Last week some jobs data were published for January, and the headline number was an unemployment rate of 8.3%, a 0.2 per centage point drop over December’s 8.5% rate.  This seems highly encouraging, but it’s useful to look at some of the data underlying this number: those data give a clearer picture of the true employment picture for our economy.

If we look, for instance, the BLS’ participation rate—the per centage of Americans actually looking for work—some other aspects of our jobs numbers appear.  The Dec 2011 participation rate was 64% of a civilian labor force (those aged 16-65) of some 153,887,000.  Yet the participation rate of January’s civilian labor force of 154,395,000 had dropped to 63.7%—or 138,000 fewer Americans actually were working despite a larger labor force and 243,000 net jobs “created.”

Adding those missing 138 thousand Americans back into the numbers yields an unemployment rate of 9.1%%.  The participation rate in Jan 2011 was even higher: 64.2% (notice that: under the Obama policies, the participation rate keeps falling, as more and more Americans despair of getting jobs).  The civilian labor force that year ago January was 153,250,000 compared to Jan 2012’s 154,395,000.  Projecting 2011-2012 population growth rate onto 2011’s participating population gives an expected 2012 participating population of 155,539,000, or  1,144,000 more than the BLS says was participating in Jan 2012.  Adding those missing million Americans back into the unemployment equation of unemployed/(Civilian labor force) gives an unemployment rate of 9.0%.

Indeed, if the participation rate were at the level it was at the start of President Obama’s administration, as James Pethokoukis, of The Enterprise Blog, points out, the unemployment rate today would be 11.0%.  But under Obama’s policies, the jobs really aren’t there (the 243 thousand additional jobs appearing between December and January notwithstanding, coming as they do with 5 million fewer Americans actually working today than at the start of the Obama administration), and Americans, millions of whom have been out of work this entire administration, are giving up.  Moreover, a “measure of unemployment which includes both the discouraged plus part-timers who wish they had full time work” yields an unemployment rate that’s “a sky-high 15.1 percent.”

These are just some ways of looking at the true unemployment rate.  Tyler Durden, at Zero Hedge, writes of yet another way.

Using BLS data, the US civilian non-institutional population was 242,269[,000] in January, an increase of 1.7 million month over month: apply the long-term average labor force participation rate of 65.8% to this number…and you get 159.4 million: that is what the real labor force should be.  The BLS reported one?  154.4 million: a tiny 5 million difference.  Then add these people…to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers.  What does this mean?  That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%.

The Wall Street Journal put it this way:

After such a long trough, the economy’s natural recuperative powers are taking hold.

Washington has also stilled some of its damaging impulses, at least temporarily, thanks to the gridlock that arrived a year ago with the Republican House.

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