Whenever the unemployment rate drops, economically savvy observers know to ask a key question: What happened to the employment-population ratio?
Under the government’s definitions, people only count as unemployed when they’re actively looking for work. So when the unemployment rate drops, it could mean that unemployed people found jobs, or it could mean that they gave up looking for work. The employment-population ratio, which measures how many people are actually working, is harder to fool.
Today’s jobs report carries good news on both fronts. The unemployment rate fell, and the employment-population ratio rose. That means the improvement in the labor market is real — people actually found jobs.
The employment gain wasn’t immediately obvious to some observers because of a quirk in this month’s report. Every January, the Labor Department readjusts its data to account for changes in the population. The tweaks are especially significant in years like this one that take into account a new decennial census.
This year, the population adjustment makes it look like the employment-population ratio didn’t change from December to January. In reality, the ratio improved by 0.3 percentage points. The gains were just masked by the population adjustments.
Here’s what happened: According to the Census Bureau, the civilian population grew by 1.5 million people in 2011. But the growth wasn’t distributed evenly. Most of the growth came among people 55 and older and, to a lesser degree, by people 16-24 years old. Both groups are less likely to work than people in their mid-20s to early 50s. So the share of the population that’s working is actually lower than previously believed. Taking that into account, the employment-population ratio went up. The unemployment rate wasn’t affected.
“There was not a big increase in discouraged workers,” economist Betsey Stevenson commented on Twitter. “What happened was Census found a bunch of old people we had assumed died.”
The adjustments had other effects, as well. They made drop in the number of unemployed look smaller than it really was, and the rise in the number of employed look bigger. And because the Labor Department doesn’t readjust its historical data to account for the new calculations, it isn’t possible to compare January’s figures on employment, unemployment and similar measures to those from earlier months.
They can fool some of the People, some of the Time.
But they can't fool ALL of the People ALL of the Time.
For YEARS, successive American goverments have been doing all they can to EXPORT jobs!
Got an iPAD? How much American sweat do you think it contains?
Oh? You think Sweating to be only for Third World Countries? And you can consign it to History?
Let me know when those poor Americans struggling to put food on the Family table become convinced about these lies, damned lies and statistics.
It's not a Recession. It's a Global ****DEPRESSION****.
Only the government massaging of numbers, globally, hides it.
The bellies of hungry children and frantic parents don't lie!
Those with jobs, *****outside of America***** have learned what their strategy to STAY WORKING needs to be.... and that strategy is NOT good news for America.
Did they fail to mention in that article that the 0.3% in population / employment rate still has it below 60% which historically is aweful. Clinton and Bush years were mostly north of 70%.
This reminds me of a Russian joke, from the 1960s:
Khrushchev (Dictator of Russia) and JFK challenged each other to a foot race. JFK won.
The Russian Press: "In the foot race, Our illustrious leader beat all other runners, save one. The bumbling US President managed to beat only one contestant."
That is Fox news, and you people swallow it like candy bars.
Another Soviet joke from the same era:
A Soviet citizen walks into Red Square shouting "Khrushchev is an idiot! Khrushchev is an idiot!"
He is arrested and sentenced to 11 years in prison. One year for insulting the Party Secretary and ten years for revealing a state secret.
Paul Krugman also pointed out the fact that the drop in unemployment was real and not a statistical artifact.
But he noted that we would need 7 more years of job growth at the January lovel to return unemployment and labor force participation rate to where they were at the end of the Clinton administration. There has been ZERO net job growth since then, at the same time as the population has steadly expanded.
Now if the Republican Congress can just restrain itself from strangling this recovery in its cradle, we might have a shot at a decent economy in a few years.