Is The 4.7% Unemployment Rate Accurate?

2017-10-30T05:34:11+00:00 June 3rd, 2016|Categories: Economy, Politics|

The unemployment rate in the US officially fell to 4.7% for the month of May according to the Bureau of Labor Statistics (BLS). That low number is despite the fact that job creation was – according to their own numbers – quite weak. Only 38,000 new jobs were apparently added during the month of May.

How did the unemployment number go down? It’s a very counter-intuitive process. CNN described it in their discussion of the BLS report by saying: “The drop in unemployment came as more disheartened Americans stopped looking for jobs and dropped out of the labor force in May.”

Let’s focus on this: because this is the language that is hidden in plain view for everyone to read (or hear) – yet it’s intent (and meaning) seems to bypass critical awareness – as if it has no meaning. It’s as if this “language” creates a form of amnesia as it is spoken, and all the listener takes away from the end discussion – all they really hear – is that the unemployment rate is 4.7%.

When you read (or hear) that the “drop” in unemployment came as “more disheartened Americans stopped looking for jobs and dropped out of the labor force in May” – what that really means – is that those people who stopped looking for jobs – no longer exist for official statistical purposes in calculating the unemployment rate. And the universe of people from which the “official” unemployment rate will be calculated – will involve a smaller group of people – because the “disheartened Americans who stop looking for jobs” continues to grow.

Think about the employment situation in America like a giant job fair. This job fair is on a mammoth fairgrounds that is fenced in with barbed wire. Inside the job fair, there are rides:

  • If you’re on one of the rides, you have a job

  • If you’re on the fairgrounds, but not on a ride, it means you don’t have a job – but you’re looking for a job

  • And if you’re outside the barbed wire of the fairgrounds, it means you don’t have a job, but it also means you don’t exist for “official” unemployment purposes. You’re not counted because you reside outside the gates of the fairgrounds. 

Even though you’re outside the gates of the fairgrounds, you still need to eat. You still have a mortgage or rent. If you’re a recent graduate, you most likely have a chunk of student debt you can’t easily sweep under rug.

But if you’ve become “disheartened” and “stopped looking for a job”, and “dropped out of the labor force”, you’re still no further ahead. In fact you’re falling further behind. But those very actions have helped perpetuate mythical unemployment reporting – which now supposedly stands at 4.7%.

For right now, everyone still seems to be focused on the people inside the job fairgrounds. Those with jobs – and those looking for jobs who are scattered about the fairgrounds. However most are unaware that there is a large, voluminous group of people that is rapidly increasing outside the job fairgrounds. They are outside looking in. They have been ignored. No one has fully quantified or given voice to this group – yet. Because they don’t seem to fully exist for statistical purposes – yet. But they will. Some calculations have this group at over 20% unemployment. In some cases approaching 1 in 4 people or nearly 25% unemployment.

Rapid and unexpected change can occur when this group – who has redefined its meaning of success and happiness with a quiet tenacity and purpose, finds its voice. And if you listen carefully, that sound you hear, is the clearing of their collective throat, before they speak.