Before President Obama and the Democrats start strutting too proudly about the new unemployment rate it is important to recognize how the numbers announced this morning lie. It’s simple math so stay with me and we’ll walk through why things are not as good as they sound.
The unemployment rate, on the surface, is a simple formula that divides the number of unemployed workers by the total workforce, expressed as a percentage.
(UNEMPLOYED WORKERS / TOTAL LABOR FORCE) X 100 = UNEMPLOYMENT RATE
Where the numbers lie is what an “unemployed worker” is. The Bureau of Labor Statistics (BLS) defines unemployed workers as follows:
“Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.”
Therein lies the hidden truth and why this morning’s numbers are misleading. The economy added a net of 120,000 new jobs in November, and the new job totals for September and October were revised upwardly by 52,000 and 20,000 jobs respectively. So we have a total of 192,000 jobs added to the workforce (not including those previously reported for September and October) BUT 315,000 PEOPLE FELL FROM THE RANKS OF THE UNEMPLOYED. That means they stopped looking for work in November.