America's headline unemployment rate has been flattered by the number of people no longer counted in the denominator used to calculate it, resulting in a skewed picture that hides how serious the level of unemployment actually is, The Wall Street Journal reports.
For example, a comparison of jobs data between the start and end of 2011 shows the ranks of the unemployed fell by 822,000 while the number of people not in the labor force grew by a larger 1.24 million, the Journal says. The unemployment rate fell by 0.6 percentage point over that time to 8.5 percent.
Moreover, the participation rate—the share of the working-age population either working or looking for work—has fallen by 2.3 percentage points over the four years through May to 63.8%, a three-decade low.
Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.
Nearly 88 million people—about seven times the ranks of the officially unemployed—aren't part of the headline rate's calculation, the Journal says.
The extremely long duration of joblessness that has seen people fall off
the rolls has had a bigger impact than aging since 2008, the Journal says. The civilian employment ratio, which simply divides employed people by total population, has dropped from 63 percent to 58.6 percent in just five years.
The Business Insider reports that new data from the Bureau of Labor
Statistics shows U.S. payrolls expanded by 80,000 net positions in June as
the unemployment rate remained unchanged at 8.2 percent.
Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.
Economists polled by Bloomberg were looking for a gain of 100,000 during
the month, with private payrolls advancing 106,000, but private payrolls
only expanded by some 84,000 positions.
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