Gaming The Unemployment Rate

Last month, the unemployment rate unexpectedly dropped despite the loss of more jobs. The reason for is this is the fact that the Obama Administration is gaming the numbers by shrinking the workforce.

Every month, Obama's Bureau of Labor and Statistics (BLS) conducts a phone survey of about 50,000 respondents -- called the household survey -- to determine if people are working full-time or on a temporary basis; are unemployed and receiving benefits; or have just stopped looking for a job altogether (the so-called discouraged worker).

What the BLS has been able to do is to shrink the workforce by lopping off discouraged workers in the assumption that they are longer part of the overall workforce. But these are people who would really work if they could. The discouraged worker could be a college graduate who's living at home and waiting for the employment situation to improve. That kind of worker could also be a spouse who decided to be the house mom or dad until things get better. But, who ever they are, eliminating them from the report causes the overall workforce to be a smaller part of the economy; resulting in a better than actual unemployment rate.

Just think about it. If you make ten phone survey calls and you find out that you have contacted eight full-time workers; one unemployed worker still looking for work; and one unemployed discouraged worker who is not looking for work; and, you completely ignore the discouraged worker in you calculations, you wind up with an unemployment rate of about 9 percent (one unemployed worker out of nine with one other being exclude from the report completely). But, if you included that discouraged worker in the tally, the result would be a 20 percent unemployment rate because you would now have an overall workforce of 10 people; of which two workers are being truly unemployed.

Theoretically, the discouraged worker is not part of the workforce. But, then, so too is the worker who is unemployed and collecting benefits and not really looking for a job. So is the injured worker who can't start looking for work until he/she is well.

I think that this is a convenient "loophole" in the reporting that distorts the truth. To me, that is why it is important to understand the true number of non-working Americans: the unemployed, the under-employed, and the discouraged worker. You can find that data at the Shadow Government Statistics site: (Click to See Site Data)