A Rise to a 5.5% Unemployment Rate Is a Good Thing?

Since the latest jobs report was released yesterday morning, more than a few economists are touting a strengthening jobs market because the unemployment rate rose from 5.4% to 5.5%. Oddly enough, this would normally be true since the official and publicly announced unemployment rate is calculated without including workers who have given up looking for a job but still want to work.  Sensing a better chance of employment, many of those are once again attempting a job search. Add some of those people back into the workforce and it is natural for the unemployment rate to go up.  That is as long as the number of workers rejoining the workforce is greater than the number of jobs being created.  Superficially that was the case.  The size of the workforce grew by 397,000 and 280,000 jobs were created; resulting in an increase of unemployed by 125,000 and an increased unemployment rate.

However, if this was really true, we should have seen a corresponding reduction in the number of people not looking for work.  We didn't.  Instead the U-6 number of Table A-15 -- the Alternative measures of labor underutilization -- stayed the same at 10.8%.

Also, if the job market was truly improving, the number of people who are long term unemployed should be going down.  But, again from Table A-15, the U-1 percent for those people out of work for more than 15 weeks rose from 2.3% (in the prior month) to 2.4%. At the same time, job losers (the U-2 report of the same table) rose from 2.6% to 2.7%; month-over-month.

I guess I'm tired of economists simply looking at the top line numbers and ignoring the details and coming up with the false conclusion that this report shows a strengthening job market.

References:

THE EMPLOYMENT SITUATION—MAY 2015 - Bureau of Labor Statistics:  http://www.bls.gov/news.release/pdf/empsit.pdf

Economists agree that the May jobs report was good all around: http://www.businessinsider.com/why-the-unemployment-rate-rose-2015-6

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