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All Da King's Men

The Unemployment Myth

By Da King Published: August 12, 2009

In July, the unemployment rate dropped from 9.5% to 9.4%. The media choir immediately began singing an identical chorus - the recession is over, recovery has begun.

But there was a curious aspect to that "drop" in the unemployment rate. America LOST 247,000 jobs in July. How can the unemployment rate drop when hundreds of thousands more jobs were lost ? Answer - it can't drop. It's impossible. The alleged drop in the unemployment rate is a myth, a statistical sleight of hand. Unemployment went UP in July, not down. The only thing that went down in July was the number of people filing for unemployment compensation. That's how the Bureau Of Labor Statistics (BLS) measures unemployment. The "drop" in unemployment only reflects the number of unemployed people for whom unemployment benefits have expired. Those people are still unemployed. They just aren't in the official BLS unemployment statistics any longer. The BLS even notes this little tidbit in it's July report, which apparently escaped the media's attention:

The civilian labor force participation rate declined by 0.2 percentage points in July to 65.5 percent

That means less people are working. That means unemployment went up, not down. Call me crazy, but I'll say the recession is over when the economy starts creating jobs, not when it merely loses less than predicted by certain economists. If we lost 247,000 jobs every month, as we did in July, that comes out to nearly 3 million jobs lost in a year. That's a recession.

When there is a recession as long as this one, where people are unable to find jobs and they fall off the unemployment rolls, the government refers to them as having "left the workforce." The BLS does offer an unemployment rate that includes the folks who have "left the workforce." In June 2009, that was 10.1%. For July, it was 10.2%. When economists predict that unemployment could reach 10% by the end of the year, they never seem to remember to tell us it's already there.

I don't want to put too black a cloud over the July unemployment figures. Those 247,000 jobs lost were the least we've lost in a year. Maybe the recession has bottomed out, for now, but the worst is yet to come. More on that later.



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