Feds' Unemployment Figure Is A Big Lie

When the Bureau of Labor Statistics (BLS) issued its February unemployment figures, the media, the White House and Wall Street celebrated with backflips, fist-bumps and chest-pounding.  The cause for jubilation was a government report that showed the jobless rate had dipped to 5.5 percent.

Their joy was not dampened by the continuing softness in the economic recovery.  In government circles, these numbers are evidence that the American economy is firing on all cylinders. Economic reality, however, is impossible to define with a single statistic. 

The depressing truth is that the unemployment number doesn't accurately reflect the job situation in the United States.  In fact, the chief executive officer of the nation's leading polling organization offered a harsh assessment of the federal unemployment figure earlier this year.

"There's no other way to say this," cautioned Jim Clifton after the December report.  "The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie."

Clifton knows what he is talking about.  His Gallup firm publishes reams of data on the country's job situation.  Their figures are often cited by money management professionals and others because many believe the numbers are more accurate than the government statistics.

For the record, Gallup's latest 30-day rolling average pegs the current unemployment rate at 6.4 percent.  The number of "underemployed" Americans is a staggering 15.7 percent of the workforce.  These people are often working part-time because they can't get a full-time job.

In his appraisal of the current job environment, Clifton noted that as many as 30 million Americans are either out of work or "severely" underemployed.  "Trust me," Clifton said.  "The vast majority of them aren't throwing parties to toast falling unemployment."

A cursory glance through the BLS data incontestably supports Clifton's viewpoint.  For example, there are 30.4 million Americans who have been out of work for 27 weeks or longer.  These so-called long-term unemployed are not counted in the government's official jobless percentage.

Burrowing in the data, the employment picture turns fuzzy when you discover that the number of part-time workers is growing.  There are 20 million Americans in part-time jobs, an increase of more than a 400,000 workers from January's count.

Of those in part-time jobs, nearly 7 million (6.7 million) were forced into these circumstances because they were laid-off or their hours were reduced for a variety of reasons.  These hard-working Americans want full-time work, but they cannot find it.  They are not counted in the government's jobless rate.

Another disturbing trend is the disappearance of the 40-hour work week.  In February, the average weekly hours worked in non-government jobs was 34.6 hours, the fifth straight month it has remained at this level.  This helps explain why wages have stagnated as the economy has struggled.

If that isn't enough to depress you, then consider that the number of people not in the workforce has continued to climb.  There are now 92.8 million Americans currently not in the labor force.  The labor participation rate, 62.8 percent, is the lowest since March of 1978.

By way of explanation, the labor participation rate is the percentage of working-age persons in the economy who are either employed or unemployed but looking for a job.  Typically, "working-age persons" are defined as people between the ages of 16 and 64.

Why are the numbers of people in the labor force shrinking?  Since the recession, more Americans are opting to return to school, to declare themselves disabled or to stay a home rather than work. Economists blame bleak job prospects for this trend.  

The United States, once the world leader in labor participation, has fallen among the also-rans.  Canada, Australia, Belgium and even Finland have rates higher than our country.  In fact, since 2000, the U.S. labor participation rate has tumbled from 67.3 percent to the current 62.8.

Even worse, about 12.2 million Americans have left the workforce since President Obama assumed the Oval Office in January, 2009. You won't hear that number ever quoted in the mainstream media's reports about the state of the economy.

The number of workers euphemistically known as "marginally attached to the labor force" also increased.  There were 2.2 million people who did not actively look for work in the last four weeks for reasons ranging from family responsibilities to ill health.  They are not counted in the jobless rate.

These figures and others underscore the disconnect Americans feel when they hear the feds' unemployment statistic.  The government number suggests the jobs outlook is improving, but for most Americans, there is little reason to cheer.

In his review of the current economic situation, Gallup's Clifton has called on "the talking heads at the White House and Wall Street to start reporting the truth" about jobs and employment in the country. Unfortunately, that is not likely to happen until a new president is sworn into office in 2017.

As long as Barrack Obama occupies the White House, the myth of America's recovery will continue to be propagated by his acolytes in the media and echoed by the Wall Street titans eager to convince investors that the economy has never been better.

To quote Jim Clifton, it is all a Big Lie.