The unemployment rate released every month by the federal Labor Department is mostly a crock. So why do we still care what it shows?
For the record, it shows that things are pretty spiffy in the job market.
The economy added 223,000 jobs last month as unemployment fell to its lowest rate since 2008, the Labor Department said Thursday. The jobless rate dipped to 5.3 percent from 5.5 percent in May.
Just look at this chart from Bloomberg.
But the unemployment rate isn’t going down because people are getting jobs. It’s going down because people aren’t getting jobs — and they’re giving up trying.
The actual unemployment rate is over 10 percent, CNBC says. While lower, the rate has been in double digits for seven years.
The long-term unemployment rate is over 25 percent.
In an essay earlier this month, Jim Clifton, CEO of the Gallup Polling Company, called the unemployment rate “The Big Lie.”
If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed.
That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed.
Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.
There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.
Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.
There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
And, yet, we dutifully report it each month as if it means something.