The True Number Is 36%

How one defines "unemployment" is the key to understanding what it really means. Merriam-Webster defines it in rather simple terms: "the state of being unemployed : involuntary idleness of workers; also : the rate of such unemployment." The way the Bureau of Labor Statistics (BLS) deals with the reality of people being out of work is often meant to bring warm fuzzies to the masses depending on if it is an election year or what particular political party the President at the time belongs to. The purpose of this Hub is to give it to you "straight up" without the smoke and mirrors we see coming out of the BLS.

So first let me clarify the definition. If an American worker, of age, is eligible to "participate" in the civilian work force and not currently working that is the participation rate. That rate is being manipulated by the BLS by dropping people from the roles of the unemployed versus them finding gainful employment..

BLS defines unemployment rather broadly and here's their definition: "people who want a job, but can't get one." So how do you measure "people who want a job?" You can cha-cha-cha around that all you want, and the BLS does exactly that. Take the current U-3 unemployment figure, which was reported as 8.3% last month, and understand what it really means. What happened was that the BLS cut 1.2 million people off the rolls who hadn't made any effort recently in finding a job. Where did they go? They are still unemployed. Ever heard of the concept of being discouraged? The latest figure was significantly distorted by the huge "seasonal adjustments" that occurred during the time of year the reporting was done. In other words, the numbers were cooked.

Think of it this way. When the American workforce contracts what happens to the BLS' "official unemployment rate?" It gets lower, not bigger. Is that contraction a bad thing? Of course it is, contrary to what all the nitwits on Capitol Hill say about unemployment compensation being a job creator. That's sheer stupidity in someone's thought process. The country is going to become more prosperous by having people ride the unemployment rolls for what literally amounts to years now who can't find work? What is even more mystical is that those people aren't counted in the BLS "official unemployment rate." Did you realize that?

Lets suppose that everyone under the age of 25 just up and quit looking for work. The result would be devastating to any economy but where would the "official unemployment rate" go - up or down? It would go down. Why? Because the pool of people actively seeking employment would be reduced significantly. See where the 1.2 million people went now. They are still there and still unemployed. Lets talk statistics for a minute. We know that the U-3 is being massaged. In the age group 16-19 the U-3 rate is 23.2% and between 20-24 years old it is pegged at 13.3%. The sex of the young workers play a roll since it is 2% higher even still for men than women. Smoke and mirrors? You bet you it is. Ask someone who is unemployed.

This is Obamanomics in action. The work force is in contraction, not expansion. So the BLS shaves the numbers by dropping people from the participation rate and you see figures like 8.3%. The average Joe on the street might eat that up but it isn't reality and the Main Stream Media again isn't reporting the truth. It's incredible hearing administration officials grinning and telling us all that their policies are working and we're supposedly on the right track when the opposite is true. The fact of the matter is that very rarely has job growth been much higher, if any, than population growth.

What the U-3 incorrectly measures, using BLS lingo, is the "total of workers unemployed, as a percentage of the civilian work force." That isn't even close to being reality after they jiggle the numbers by not counting everybody they should be counting. Rather than look at the labor force participation rate, the true indicator, we're given the smoke and mirrors routine on a monthly basis by the BLS. As previously stated, the percentage of work-age Americans eligible to participate in the work force who are not is 36.3%. How bad is that? The worst in the past 3 decades and of Great Depression proportions. But we're not in a recession anymore?

Then we keep hearing how Obama's stimulus bill is so successful. Here's a chart that Representative Jim Jordan (R-OH), chairman of the House Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending presented to illustrate the effect of this pork ridden bill and the impact it had on workforce participation.

According to Jordan what we need is real reform rather than the smoke and mirrors routine we keep getting out of the BLS. There is a Jobs For Growth Act in the mill that actually addresses some of the problems that need to be fixed. It includes proposals for a flat tax with two rates, reduction of corporate taxes to encourage businesses to locate or relocate in this nation, much needed regulatory relief, and last but not least increased domestic energy production. Been to the gas pump lately? What happens when fuel prices go up? You really don't think everything else doesn't go up with them do you?

We don't need small reforms. We need a complete overhaul with fine tuning thereafter. They screwed this whole thing up and now we need to elect people who have the guts to take the bull by the horns and fix it rather than all the finger pointing we see going on. Who cares who did it? Put away the smoke and mirrors routine and get jiggy with fixing it.

As Always,

The Frog Prince