The April's Jobs Report: More A Story Of Giving Up Looking For Work

According to the Bureau of Labor Statistics, the unemployment rate dropped from 6.7% in March to 6.3% last month.  It did so by adding only 288,000 jobs.  Of course the relative math here, doesn't make a whole lot of sense. 

If you have a labor force of 156.2 million workers in March going into April and, you multiply that by the four tenths of a percent drop in the unemployment rate, you come up with 625,000.  That's how many workers would have had to actually find work in order for the unemployment rate to drop to 6.3%.  So, obviously, something else happened in April.

That something else is the fact that 806,000 workers simply dropped out of the labor force.  Of that number, 783,000 where considered to be discouraged workers; with the remaining  23,000 being actual retirees.  By definition, a discouraged worker is a person of working age; capable of work; wanting to work; but, in the frustration of not finding a job, has just given up looking.  Because of this, the Bureau of Labor Statistic no longer considers them part of the workforce and, as a result, they are the primary reason that the unemployment rate dropped so dramatically.  In other words, twice as many workers stopped looking for a job as those who found one. 

For those who would believe that baby boomers, who are retiring at a rate of 10,000 a day are responsible for the lowering of the workforce, the so-noted 23,000 retirees hardly squares with this false belief.  The reality is that we had a true unemployment rate of 12.3% in April when that month's 9.5 million discouraged workers are taken into account.  All told, we actually have 19.2 million unemployed Americans.  Not the published 9.7 million.  This is horrible.  Especially, considering the fact that we are closing in on a day when more people will have given up looking for work than there are those who are actively pursuing it.  This has not happened since the Great Depression.  This despite the fact that the recession ended nearly 5 years ago.

References:

April Employment Situation Report Overview: http://www.bls.gov/news.release/empsit.nr0.htm

Definition of Discouraged Worker: http://www.investopedia.com/terms/d/discouraged_worker.asp

April Employment Situation Report: Table A-15: Alternative Measures of Labor Underutilization: http://www.bls.gov/news.release/empsit.t15.htm