The Unemployment Numbers Conundrum

Screen Shot 2014-04-06 at 9.10.02 AMThe unemployment numbers for March were released on April 4 and they provided a stark reality of the jobs market that seems unable to fully recover.  In March, the economy added 192,000 jobs which was below the 200,000 job prediction many economists had hoped to see and well below what many in the market had predicted.

With each new month and each new unemployment number, I often wonder how the unemployment numbers keep dropping or stay steady while millions of Americans are still struggling to find work. I finally decided to find out what exactly constituted an “employed” person according to the Department of Labor and the answer I found shocked me.  According to the Bureau of Labor Statistics:

“People are considered employed if they did any work at all for pay or profit during the survey week. This includes all part-time and temporary work, as well as regular full-time, year-round employment. Persons also are counted as employed if they have a job at which they did not work during the survey week, whether they were paid or not, because they were.”

Yes, you read that right.  If a person did ANY work they are considered employed and will thus reduce the unemployment rate. Another thing that surprised me was that a person can be considered employed even if said person didn’t earn any money. The BLS states that a person is considered employed if he/she works for a family “business” even if that person didn’t receive any compensation for their work.

The Bureau of Labor Statistics gives two scenarios and asks if these people would be considered employed.  The scenarios are as follows:

  • George Lewis is 16 years old, and he has no job from which he receives any pay or profit. However, George does help with the regular chores around his father’s farm and spends about 20 hours each week doing so.
  • Lisa Fox spends most of her time taking care of her home and children, but she helps in her husband’s computer software store all day Friday and Saturday.

Under the government’s specifications for “employment” both of the above cases would be considered employed.

So what exactly does the government consider unemployed?  The BLS lists those who are tabulated for unemployment numbers as “Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.”

Doesn’t that seem a little narrow to you?

Now let’s look at what happens to a person when they aren’t “actively” looking for work.  If a person has gotten discouraged, given up, or was unable to look for work in the 4 weeks before a report was issued then they are considered to have left the labor force and are, once again, not considered eligible to be tabulated and included in unemployment numbers even though they do not have a job. As of right now the percentage of people over the age of 16 who are NOT participating in the work force stands at 36.8% as compared to 34.3% when President Obama took office in January 2009.  In the last year alone, the number of people not considered as part of the labor force has grown by 1,134,000.

The jobs market isn’t improving at a rate even close to what the Obama administration would have you believe, however, the mainstream media will never give America the “real” jobs picture. It is rather sad that even with all the exceptions to those considered as part of the workforce that the unemployment rate hasn’t dropped faster. At the current rate of people dropping out of the work force or getting part-time work – the Obama administration should be able to reduce the unemployment rate to pre-recession levels by the time he leaves office.  The country will be no better off but at least the media and President Obama can gloat about what a good President he was.

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