The official, U-3 unemployment rate is 8.6 percent. But while the unemployment rate has been dropping, so has the labor force participation rate, as measured by the U.S. Department of Labor. Instead of being classified as unemployed, more and more Americans are no longer considered part of the official labor force that is either a) working or b) looking for work. This lowers the unemployment rate. But what if Washington hadn’t disguised all those discouraged workers since the recession started? Well, take a look at the yellow line below (via JPMorgan). The unemployment rate would be over 11 percent:
Some economists point out that there is a secular reason for the drop: America is aging and more of us are heading into retirement. But JPMorgan economist James Glassman says demographics are hardly the whole story:
How significant is the demographic drag on the labor force participation rate, labor force growth, and the unemployment rate? A useful guess about this is to ask, What would happen to the overall labor force participation rate if the participation rate for each age group (cohort) stayed at the late-2007 (prerecession) level. That would ignore the effect the recession had on each group, the increase in the number of dropouts.
In that calculation, any change in the overall labor force participation rate would reflect only the rising number of workers turning 55 or more who naturally, according to the illustration [below], begin to scale back their hours or retire
The number is calculated by looking at how many people are employed. The top line marks out where the labor force participation rate stood in 2007. The bottom line illustrates the actual labor force participation rate, which has fallen from 66.4 percent in 2007 to 64 percent currently. The second from the bottom line in the illustration shows what the labor force participation rate would have done if the participation rate for each age group had held steady over the recession as the population aged. It indicates that the labor force participation rate would have fallen to 65.1 percent, accounting for only half of the decline in the actual labor force participation rate. This calculation is a maximum estimate of the demographic impact on the labor force participation rate.
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Soooo, does the title imply that the Bush Administration did want us to see the chart??? Remember that this “Great Recession” was brought to us courtesy of Bush II and his need to outdo Daddy in Iraq, a needless an wasteful effort that will collapse when we finally dig ourselves out of there.
I am 58 years old, and out of work for 3 years. My sister is 57, overeducated w/2 masters and also unemployed. I have been to 24 Job Fairs along with my sister and no takers on anybody over 50. Why, simple it is Obamacare, no employer wants to hire middle aged workers that might be a drain on their Health Care Providers. I have met many other unemployed workers 50+ and older who have lost hope of ever working again. If you have a job, don’t lose it, almost no one is hiring no matter what government figures show. Our American dream has disappeared along with Hope and the dignity of having a job. Oh, I was not eligible for Unemployment and lived on my savings for 3 years, too young for a reverse mortgage and too young to retire. Thank God for food stamps.
The 0bama regime has brought Orwell’s MiniTru to reality.
Believe the exact opposite of any government numbers and any MSM polls.
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Govt statistics are bogus, the SEC, and FITC are owned by bankers along with Congress–Treasury, and the FED–They are not protecting the Constitution or Americans–
According to the administration, extending unemployment helps the economy. Perhaps an unemployment exrension to five years would really boost the economy. “Figures don’t lie, but liars figure.” Wait until all the temps hired for Christmas get laid off. What’s the “True” unemployment figure now? Probably around 16% The government releases all kinds of figures……which are usually adjusted downwards…..very quietly on a Friday night. Can we say “Pants on fire?” Perhaps we should say “House on fire.”
The chart Obozo doesn’t want you to see is http://www.shadowstats.com . This chart grossly underestimates the real numbers. Nice try, though.
Exactly. I thought that I read somewhere that older folks are starting to go back to work and/or work longer now due to the recession. Wouldn’t this offset some if not all of this age groups Participation Rate decline?
This assumes that the older employees are allowed to work longer. For many over 50, their skills in areas such as information technology and engineering are assumed to be obsolete. In addition, some skills can be had more cheaply by employment of a younger or off-shored worker.
Even more scary is people think its because (partially) boomers are retiring. When in fact the 65+ and 50-65 age set has seen pretty consistent participation. The huge drop off is in 18-24 and 24-54, the heart of the workforce. And they aren’t all going back to school!
http://www.fundmymutualfund.com/2011/12/are-we-making-too-much-of-drop-in-labor.html