Happy New Year! I know I’m a little bit late but as I get older it takes me longer to recover from the holidays. I see that not much has changed with the economy. The government continues to tell us that the recovery is right on schedule and those of us who are looking at the underlying stories behind the data keep shaking our heads and wondering when reality is going to rear its ugly head. It’s coming.
Unemployment numbers were up again but coincidentally a massive exodus of discouraged workers from the job market kept the unemployment rate from rising above 10%. Let’s take a closer look at these numbers. First, the civilian labor force participation rate fell to 64.6% in December. What this represents is the percentage of eligible, working-age people actively seeking work in the past 4 weeks. Notice how drastically this number plummeted throughout 2009. This is the lowest level since 1985, meaning that we are witnessing a historic and remarkable decline.
Next we have the long-term unemployed (those jobless for 27 weeks or more) continued to aggressively trend upward, reaching 6.1 million last month.
When people give up looking for work, they are no longer part of the civilian labor force and are not considered by the government as unemployed, but as a ‘marginally attached worker’. How convenient. About 2.5 million people were marginally attached to the labor force in December. These are people who were not in the labor force, desired and were available for work, had looked for work sometime in the last year but were not counted as unemployed because they had not searched for work in the 4 prior weeks.
Discouraged workers, is a subset of marginally attached workers. This figure represents those who want to work, but are not actively seeking work due to weak economic conditions. This number continues to climb as well.
Taking all of this into account we can easily see that the true unemployment numbers are much worse than the government is admitting. The share of the population in the labor force has fallen to its lowest level in 24 years. 1.7 million workers dropped out of the workforce from July through December, marking the biggest six-month loss since 1961.
You do the math. Do you really think that because someone is discouraged or marginally attached, they are no longer unemployed. I’m sure we can both agree that they’re still unemployed. Your government doesn’t see it that way. Why? Because, frankly, they don’t think you’re very bright, and they’re pretty sure you won’t figure it out, and they’re even more confidant that if you do figure out they’re lying to you, you won’t lift a finger to object.
