The True State of the Employment Situation

by Pejman Yousefzadeh on February 18, 2012

It’s a whole lot worse than the Obama administration likes to pretend it is:

White House officials are trying to downplay the growing political damage caused by a shrinking federal statistic: the percentage of working-age Americans who actually have jobs.

The increasingly visible statistic shows that roughly 11 million working-age Americans are being excluded from the nation’s formal tally of 13.75 million unemployed Americans.

[. . .]

In 2000, 64.4 percent of working-age Americans had formal jobs, either full-time or part-time, according to Table B-35 on page 361. That was the measure’s high water mark.

The ratio drifted down to 63.0 percent in 2007 before hitting the skids in the 2008 recession that was largely caused by federal real-estate policies.

By October 2009, five months after the recession technically ended, the ratio hit bottom at 58.5 percent, where it remained two years later in December 2011.

Given the nation’s working-age population of 240.5 million, that 4.5 percent drop means that roughly 11 million Americans have fallen out of the workforce. They are excluded, however, from the nation’s formal unemployment rolls — which document only 13.75 million unemployed Americans.

By excluding those non-working Americans, the White House can claim that the formal unemployment rate has fallen to 8.3 percent in January 2012, down from a peak of 10 percent in 2009.

But that 8.3 percent rate only include unemployed Americans who have looked for a job in the four weeks before a sample is taken. It does not include the more than 11 million Americans who have given up looking for jobs or who have quit the workforce entirely.

Something to remember as election efforts ramp up and the White House–along with its allies in the media–tells us that the job outlook is getting better.

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