Monday, February 20, 2012

America's Workforce Ghosts

As a former Communications Manager for a Fortune 100 corporation and an active stock trader, my life has been immersed in statistical analysis. For that reason, it's no wonder that I get totally frustrated with how the employment rate is being reported each month. At the heart of that frustration is the reported size of our workforce. Since 2008, the workforce has stopped growing. It's as if, 15 or 20 years ago, Americans stopped having children because they knew their kids wouldn't have jobs waiting for them in 2008 and beyond. Obviously, that's absurd. But, not to the people who calculate the size of the workforce and unemployment rate each month: The Bureau of Labor and Statistics (BLS).

In essence, the workforce has remained at or below approximately 154 million workers since 2008. Yet, if we assume population growth, the current workforce should be above 160 million workers with more than 162 million by the end 2012. Instead, the BLS has arbitrarily created a bunch of "ghost" workers who don't exist and who are not being included in their monthly unemployment calculations. As a result, we are seeing a declining unemployment rate when, in fact, it has actually increased. To prove this I present the following chart:


While I have calculated that the "true" unemployment rate as being over 13%, the number might be a little lower if I had been able to determine how many unemployed workers were able to take early pensions and, as a result, may never return to the workforce. Even so, the current rate is a politically advantageous distortion of the unemployment situation in this country which works nicely towards the reelection bid of Barack Obama. Sadly, the truth is not being told.

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