"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Friday, February 3, 2012

The Unemployment Rate and the Labor Force

You will hear people talking about how the unemployment rate this month has dipped to 8.3% and that this means that the economy has turned around.   That would be good news for Obama's re-election, and you can count on the mainstream media hawking that storyline going forward.   But it's hard to square with certain other facts readily available at the same Bureau of Labor Statistics that puts out the monthly unemployment figures.   For instance, there is the growth in the American labor force in the first three years of each administration since 1980.   The only time the growth in that figure -- which ought to always be positive just to keep up with population growth, including immigration -- has slipped below 3% (or a growth rate of 1% per year for three years) was in the first three years of the first George W. Bush administration, when it dropped to 2.1%.   But that was after the Internet bubble burst, a recession, and 9/11.   In boom times, by contrast, like the second Reagan administration (1985-88), or the second Clinton administration (1997-2000), the growth rate in the labor force was over 5% in the administration's first three years.

So when you learn from the Bureau of Labor Statistics that the growth rate for the American labor force during the first 36 months of the Obama Administration has been a measly 0.1%, that means that, with population growth, we have substantially fewer people working today than we did in January 2009.

Here's another item that ought to jump out at people.   On average, the number of people not in the labor force ought to grow relatively slowly, with population growth.   For instance, from December 2009 through December 2011, the average growth in the population of people not in the labor force was only 119,000 per month.   But, weirdly, in January 2012 -- the same month when the unemployment rate supposedly dipped -- the number of people in the category of not in the labor force went up by nearly 1.2 million!   Here's a handy chart, and it looks as weird as it sounds:

So don't buy the one statistic the Obama administration will tout.   The background numbers don't look nearly so rosy.

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