Do we really have the lowest unemployment ever?
I was trying to write a really good story about a ‘Better Green New Deal.’ I was checking some of my data regarding unemployment when I stumbled across some unexpected information.
I knew that Trump’s exaggerations regarding low unemployment were ridiculous but I didn’t know that there was clear data showing how far off his claims are. It was obvious that his claim that ‘African-American unemployment is the lowest in history’ was silly. There was a time when African-American unemployment was at zero. As a matter of fact, it was once illegal for African-Americans to be unemployed. The means by which this zero unemployment was achieved is considered so awful that the method was outlawed by the 13th Amendment to the Constitution. This method was called ‘slavery.’ Please don’t inform Trump about this method; he might try to bring it back. If you think I am trying to be funny, think again. What is the limit of the inhumanity of this President? This President has refused to stop engaging in unthinkable inhumane policies at our Southern border, he might do anything.
A Closer Look at the Unemployment Numbers
Let’s look at the formulas to determine the unemployment rate.
This begs the next question; what are unemployed persons? This answer is simple. Unemployed persons are persons who are not ‘employed persons.’ So, the next question is, what are ‘employed persons?’ This is where it gets tricky. The Bureau of Labor Statistics considers the following to be the definition of an employed person:
People are considered employed if they did any work at all for pay or profit during the survey reference week. This includes all part-time and temporary work, as well as regular full-time, year-round employment. Individuals also are counted as employed if they have a job at which they did not work during the survey week, whether they were paid or not, because they were:
Experiencing child care problems
On maternity or paternity leave
Taking care of some other family or personal obligation
Involved in a labor dispute
Prevented from working by bad weather
Basically, if you have a job, you are employed regardless of whether you worked a single hour during a surveyed week.
The next question is, what is the ‘Labor Force?’ The Labor Force is defined as follows:
Now we are getting somewhere. We need to know the labor force participation rate and the population over 15, then we will have a better determination of what the Unemployment Rate is. See the graph below for the Labor Force Participation Rate:
The other thing we need to know is the size of the American population over 15. The Census Bureau estimate on 7/1/18 for total American population was 327,167,434. The percentage of the population zero to seventeen was estimated at 22.4%. We need the percentage of the population for zero to fifteen. I am going to assume uniformity across the first seventeen years of life. Therefore, I am going to subtract 2 divided by 17 from 22.4% to determine that about 19.8% of the U.S. population is the percentage below the age of sixteen. This leads to a population percentage available to the labor force at 80.2%. I am going to estimate a disability plus incarceration rate of 10% and subtract it to come to 70.2%. At 70.2% of 327,167.434, the size of the adult population available for work would be approximately 229,671,153 in 2019. Data on which these estimates are based are available from the Census Bureau at this link.
Next, I want to go back to the year 2000. In 2000, America had a population of 281,421,906. The population for those under 15 was 21.4%. The 15–19 age group was 7.2% of this population. I am only interested in those that are age 15 within this group. Therefore, I will take 20% of 7.2% and add it to 21.4% to come to approximately 22.84%. Therefore, the population available for employment would be approximately 67% (100 minus 23 minus 10) of the population. The estimated number available for work would be 188,552,677 in 2000. The data is available from the Census Bureau is at this link.
In January of 2000, the labor force participation rate was 67.3%. In April of 2019, the labor force participation rate was 62.8%. See Graph 1 above for these participation rates. Therefore, in January of 2000, the Labor Force included approximately 126,895,945 (67.3% of 188,552,667). In April of 2019, the Labor Force included approximately 144,233,484 (62.8% of 229,671,153).
The graph below shows the Unemployment Rate.
In January of 2000, the unemployment rate was 4.0%. The unemployment rate in April of 2019 was 3.6%. By multiplying the labor force by both sides of Equation 1, we come to the numbers in the table below:
I made my own estimates in addition to looking at the official numbers from the Bureau of Labor Statistics (BLS) in an effort to find any other problems with the numbers. I see no such problems and believe the BLS numbers should be relied upon.
So, the number of unemployed is higher in 2019, than the number was in 2000. This is only 117,000 to 200,000 people though. The real problem is shown in the drop in the number of people who are choosing to participate in the labor force. The drop in the Labor Force Participation from 67.3% to 62.8% is a substantial drop. Before the Great Recession, we had not seen a labor participation rate so low since March of 1978. The lowest rate we have experienced since the Great Recession was 62.4% in September of 2015.
Where Have These Employees Gone?
If the labor participation rate were the same level in 2000 that it is now, the total employed would have been 121,820,107. That is 5,075,838 (126,895,945 less 121,820,107) that left the labor force and never returned. This calculation is using my estimated numbers. Using the BLS numbers, the calculation would be 5,636,000. Where did these 5.1 to 5.6 million people go?
In April of 2019, there were 258,693,000 Americans available for the labor force. If we apply the same labor participation rate as in January of 2000, 67.3%, to the Americans available today, we would have a labor force of 174,100,000. Applying the April 2019 unemployment rate, 3.6%, to this labor force would give us a total number of employed Americans at 167,833,000 (174,100,000 * (100–3.6/100)). In April of 2019, the actual number of employed Americans was 156,645,000. That is 11,688,000 less than the total employed Americans had we maintained our 67.3% labor participation rate. Why would anyone consider these numbers to show a ‘great economy?’
Is this evidence of an aging population and did these people retire? 12.4% of the population was 65 and over in 2000. In 2019, those 65 and over were 16% of the population. On the surface, this aging population theory would seem to be a very large contributor to the lower participation rate. However, of the eight people I know that are 65 or over, only one has completely retired to the point that they would no longer be considered part of the labor force. Therefore, I will dig deeper. The chart below shows that people 55 and over are the only population segment that shows growing labor force participation:
The chart below shows the growth(decline) of the labor force participation rate by age group.
Though people retiring out of the labor force could still be a contributor to the reduction in the labor force participation rate, the data shows that it could not be considered the primary cause.
The truth is, there are a lot of potential reasons for the reduced labor force participation rate. In another story, I will examine some of the possible reasons for the reduction. The only things that I can state conclusively at this point, is that approximately 5.5 million people left the labor force over the past 19 years and never returned. I can also state that employment growth has not kept pace with population growth.
The reduction in the labor force isn’t necessarily the end of the world except that it is part of the reason for the desperate financial condition of the American middle class. Labor force participation was much lower in 1948, at only 58.6% and the economy wasn’t so bad. Of course, ‘Rosie the Riveter’ had left the workforce in those years to raise children. 1948 was at the height of the ‘Baby Boom.’ Labor participation grew steadily for the next 50 years as more women joined the labor force. The data show that we are currently moving into a dystopian world where younger Americans are giving up and elderly Americans are still working just to try to get by.
The point of this story is that the President is bragging about our wonderful economy. The media is reporting that the economy is in excellent condition because they are not digging beneath the surface. Worst of all, many of the people that are voting for the Moron-in-Chief are those most affected by this ‘hidden’ economic downturn. They are so desperate for relief, they cling to the President as their only hope. The problem is that the prior President would have helped those people had the Tea Party members of Congress not repeatedly blocked his efforts. It is amazing that these same Tea Party folks don’t mind the current President running trillion dollar deficits in an effort to transfer more wealth to the wealthiest Americans.
The economy is not so wonderful, yet the news media is facing such a tsunami of lies from Trump that they do not have the resources to correct everything. It is frustrating for me because I would rather be writing about optimistic ideas to improve the lives of the American people. Unfortunately, I am spinning my wheels trying to get past the dung pile of lies coming out of the President’s mouth.
The primary message of this story is that the President is flooding the news with more lies than anyone could possibly keep up with. The real unemployment rate is a secondary message. When the gig economy, underemployment, and multiple data interpretations are considered, the real unemployment rate is a subject worthy of an entire book. I only skimmed the surface in this story. My point is that the President is telling everyone that will listen about our wonderful economy and he is either a liar or a fool.
Tomorrow, I will try to work through the lies coming from the right-wing propaganda machine on another front. These are lies I can’t ignore because they are running advertisements on MSNBC of all places. Hopefully, by Saturday or Monday, I can get to another good story.