Update: The Real Unemployment Statistics, or what the government doesn’t want you to know about the economy

In my blogpost from February -  The Real Unemployment Statistics, or what the government doesn’t want you to know about the economy, I examined how the Bureau of Labor Statistics (BLS) has consistently under reported unemployment in the United States for the past 4 - 5 years.  This is an update on the situation based on the latest rates available for April.


The mainstream media continue to report the numbers directly from BLS with little critical thought given to what sits behind the numbers.  They've become complicit with the Big Lie that government is broadcasting to the citizens of the United States - that the economy is on a rebound, and that the unemployment situation is improving.


From the New York Times - U.S. Added Only 115,000 Jobs in April; Rate Is 8.1% - they've begun to look at the mass exodus from the labor pool we've been experiencing, but haven't connected the dots to the underlying figures the government is reporting:


"The unemployment rate, which is based on a separate survey of American households, ticked down to 8.1 percent in April, from 8.2 percent. But the decline was not due to the hiring of more unemployed workers; it was entirely because 342,000 workers dropped out of the labor force.

The share of working-age Americans who are in the labor force, meaning they are either working or actively looking for a job, is now at its lowest level since 1981 — when far fewer women were doing paid work. The share of men taking part in the labor force fell in April to 70 percent, the lowest figure since the Labor Department began collecting these data in 1948."

(emphasis in red mine)

340,000 Americans left the workforce entirely in April - they've given up looking for work because jobs just aren't there.

Keeping the same approach I laid out in my previous blog post, and using BLS data, the seasonal adjusted workforce was calculated to be  154,365,000 in April, down from 154,395,000 in January.  In other words the total workforce SHRUNK by 30,000 people in the past 3 months.  Sort of defies demographics doesn't it?  We've a net growth rate (0.899% according to the CIA) which means with a top line population of about 314 Million (US Census), we're adding about 2,825,000 net new people per year, or 235,000 new workers per month.  And this is using current growth rates - the growth rate 18 years ago was higher.  

This means that, in the 3 month period of February through April since I last commented on unemployment, the US should have added a MINIMUM of 700,000 net new labor participants just to cover basic demographics, with a corresponding number of net new jobs to stay at January's 8.3% level.  This much would have kept us treading water at the same levels,much less recoup the tens of millions of jobs lost since Wall Street's little fiasco in 2008.  And the government reports we LOST 30,000 in workforce participation in the same time period.

So for the numbers

Labor participation dropped from 63.7% to 63.6% from January to April, down from 66.4% in January 2002 (what I used as my baseline in my last blog:

Civilian Labor Force Participation Rate (2002 - 2012)

Calculating the real unemployment rate (once again - baselining workforce participation at 2002 levels and then adding back in the now 6,982,000 people that have given up looking for work), we get a real unemployment rate of 12.1% - fully 4 percentage points higher than what BLS is reporting.

You can see the difference in the graph below:

Until next time – If you’re not pissed off, then you haven’t been paying attention.