The U.S. Bureau of Labor Statistics reports preliminary unemployment data on the first Friday of each month. This report provides scant information about the state of the economy, but it is widely anticipated and reported—even more so during a hotly contested election season. It is useful to know what it does and does not tell us.
First, let me dispel the myth of a conspiracy to rig unemployment numbers. I have two reasons to know these data are not contrived. The first is simply that the federal government struggles to keep a secret. But the real reason I know these numbers to be true is that if the administration could pull off a secret of this nature, it would surely make up better numbers.
The fact is, the economy is in poor and worsening shape, and the drop in the unemployment rate reported last weekly hardly masks that fact. Here’s why:
The National Bureau of Economic Research declares a recession by looking at four data points: industrial production, real incomes, employment and retail sales. The recession dating is a judgment call, but as it stands now, three out of four of these measures are lower now than at the beginning of summer. Only employment continues to grow, but there is nuance to this story.
We have 310 million Americans alive today, with 155 million in the labor force. That is a smaller share than any time over the past three decades for many reasons, including baby boomers retiring, adults returning to school, and exploding disability. Then there are the individuals who have given up on finding a job. Of those who make up the labor force—people who have jobs or are actively looking—7.8 percent do not have jobs. This is some 12 million people.
Last month, total employment grew by 114,000 jobs, but the working-age population grew by 206,000. Of those who got jobs in September, 582,000 held part-time jobs for economic reasons, meaning they want to work full time but cannot.
The math here is a devastating indictment of our current economic conditions. For every 20 kids now reaching working age, only about 11 will find a job. Worse still, full-time employment is declining. If we counted only full-time jobs, last month would have seen employment drop by 468,000 jobs, a figure reminiscent of the worst days of the recession.
To put it plainly, one out of 17 workers are part-time workers due to an ailing economy, and growth in that number explained the decline in the unemployment rate last month. Sadly, the bad news gets worse.
The BLS also published data known as the diffusion index, which tracks how broadly job growth is occurring. That measure has plummeted at a recessionary rate since last year, indicating the little job growth we have is concentrated in fewer sectors.
We need to face the fact that the employment situation is so bad, no one would fabricate these numbers, even if they could.•
Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at email@example.com.