Saturday, January 9, 2016

The December 2015 Jobs Report Exposes Deceptive Calculation of the Unemployed

Despite supposedly creating nearly 900,000 new jobs in the last three months of 2015, the unemployment rate remained at exactly 5% for each of those months; and the number of unemployed has remained at roughly 7.9 million. (Sources: Employment Situation Report: Tables A-1 and A2).

To any logically thinking person, creating 900,000 new jobs should have reduced the 7.9 million unemployed to 7 million, and the unemployment rate should have dropped to at least 4.5%.  But no.  And, that "no" is all about how this country has been calculating unemployment rates since the Great Depression and how it is all about politics.

For all the years that Obama has been in office, the unemployment rate and the number of unemployed have been artificially enhanced by not counting the number of people who are out of work; frustrated at not being able to find a job; and therefore, no longer looking for work.  Now, to use that well-worn phrase: "The chickens have come home to roost!"

The fact that the unemployment rate has stayed constant, despite the creation of thousands of new jobs, just tells us that the market is finally improving to the extent that those people who previously were not counted are finally able to find work.  This is a good thing.  But, to a politician like Obama, it could be bad thing.  Especially, if more and more people start looking for work and the unemployment rate starts rising again; versus just holding at 5%.

The reality is that Americans are not being told the truth about overall unemployment.  The fact that bench-sitters haven't been counted means that the unemployment rate is understated by half.  I think it's high time that the practice of reporting unemployment numbers be changed to reflect the actual truth.

One more thing.  In those last 3 months of 2015, the average weekly wage fell from $871.92 in October to $870.78 in December (source Table B-3).  Creating jobs is one thing.  People getting good paying ones is another issue.


The Unemployment Situation Report for December 2015:

What's the REAL unemployment rate?:


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