May 4. Once again official unemployment rate went down even though the percent of adults working went down. Huh?? The percent that’s always quoted depends on the size of the “labor force”. The size of that group is determined by answering the question, “Have you searched for work in the last four weeks?” People who give up for a while, go for further education, retire or go on disability answer, “No”, so they’re not in the work force anymore. So if there are a few more jobs and a much smaller work force your “unemployment rate” goes down.
This morning the labor department published the numbers. Job growth in the country was only 115,000. 7.9 million are working part time who’d want to work full time. Still the “unemployment rate” went down to 8.1%.
A much more revealing percent is the “employment-population ratio”. As I said last month “It’s basically the number of adults working divided by the number of adults in the country.” The higher that percent is, the better. It fell a tenth of a percent last month to 58.4%. It’s actually the same percent it was a year ago.
What’s going on? For sensible reasons people are “discouraged”. 342,000 people “left the labor force” last month about three times the number of new jobs. The percent now in the labor force as compared to all possible US workers is the lowest since 1981.
One place they’re going to is “on disability”. The number of workers on social security disability jumped from 7.1 million in 2007 to 8.7 million last month. The reason for the big jump isn’t really known. Perhaps after losing extended unemployment hundreds of thousands are throwing in the towel and admitting to their lifetime of work and lifestyle injuries and going to live on small social security benefits. More than 99% of workers who go on disability stay on those benefits until retirement age. The program grants them an average $1,111 a month, a measly $13,000 a year. Still it’s better than nothing in the “Slowly Improving Economy”