January Unemployment Report: The Devil is in the Details
Despite all-around giddiness by the stock market investors and speculators, and the lemmings in the media January's unemployment numbers are much worse than reported. The Bureau of Labor Statistics, which ought to be referred to as the Ministry of Propaganda, said that non-farm payrolls added 243,000 jobs and the unemployment rate dropped from 8.5% to 8.3%. This comes as no surprise as we are in an election year and the incumbent needs good economic news to increase his likelihood of re-election.
The devil is in the details. From December to January, 1.2 million people just disappeared from the labor force. That has dropped the participation rate from 64% to 63.7%, a new thirty year low. Look even further and the numbers get worse. The part-time workforce increased by 699,000 jobs while full time jobs increased by 80,000. Ninety percent of all "new" jobs came from part-time work.
The most interesting aspect is the fuzzy math. The civilian population is 242.2 million people. If you apply the long-term average civilian labor force participation rate of 65.8% you get 159.4 million people in the work force. But, the BLS reports we there are only 154.5 million in the work force. A paltry 5 million person difference!
Add the five million people to the 12.758 million reported unemployed by the BLS and there are 17.776 million unemployed people. Divide 17.776 by 154.5 and you get and 11.5% unemployment rate. Yet, the BLS reports an 8.3% unemployment rate. The 3.2% difference between the real unemployment rate and the BLS unemployment rate also set a thirty year high.