Last week's dramatic unemployment report is more startling with a second look. Even though the unemployment rate is technically 9.2 percent, the employment-population ratio fell to 58.2 percent. Translation: at the moment, only 58.2 percent of American adults are employed, according to a report in the Atlantic
Prior to the recent recession, the ratio was above 63 percent. Normally, the employment-population ratio moves in opposition to the unemployment rate, but not this year.
In December, the unemployment rate began falling – but without a corresponding increase in the employment-population ratio. In June it was at 58.2 percent — while the unemployment rate was at 9.2 percent. Twice during the current recession — when the ratio was that low — the unemployment rate was 9.8 percent and 9.9 percent.
This phenomenon suggests, notes the Atlantic analysis, that more discouraged or otherwise marginally attached workers have temporarily exited the workforce since December. Unhappy message: the unemployment rate likely understates the problem – when factoring in the low portion of the population that is employed.
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