Record 90 million Americans not in labor force

NEW YORK – Just after Labor Day, the Bureau of Labor statistics reported more than 90 million Americans age 16 and older were not in the labor force in August, the highest level recorded since the Department of Labor began collecting the data during the Truman administration three years after the end of World War II.

On Friday, the BLS reported that the 90,473,000 Americans not currently in the labor force marked the first time the figure exceeded the 90 million threshold.

In January 2009, when President Obama first took office, there were 80.5 million Americans 16 years and older not in the labor force, meaning the number of Americans not in the labor force has increased 10 million during his presidency.

For men, the BLS reported the labor force participation rate, the percentage of the population working or considered looking for work, was 63.2 percent in August, basically unchanged from 63.5 percent in July. It's also a record low.

The BLS also reported the unemployment rate dropped 0.1 percent to 7.3 percent in August, but the figure was almost completely driven by negative factors.

The total number of people employed fell by 115,000 in August, but the unemployment rate dropped because the overall labor force dropped by a larger 312,000, a phenomenon the Wall Street Journal interpreted as a possible sign of discouraged long-term jobless workers dropping out of the labor force altogether.

Alternative calculations place “true unemployment statistics” at 23.3 percent for August, with nearly 1 of every 4 workers out of work, not the politically adjusted figure of 7.3 percent the BLS reported.

Manipulated unemployment rates

Last month, WND reported that according to John Williams, an economist known for arguing the government reports manipulated “shadow statistics” of economic data for political purposes, the real unemployment rate for July was 23.3 percent, not the 7.4 percent reported by the Bureau of Labor Statistics.

By including in the calculation of the unemployment rate people the BLS classifies as “not currently in the labor force” because of their long-term unemployment, the true unemployment rate could be more than three times the unemployment rate the BLS publicly declares.

Williams, the editor of the Shadow Government Statistics website, has repeatedly insisted that the BLS reports, such as the current showing that unemployment dropped from 7.4 percent in July to 7.3 percent in August, are essentially “meaningless.”

“The broad economic outlook has not changed, despite the heavily distorted numbers that continue to be published by the BLS,” Williams wrote. “The unemployment rates have not dropped from peak levels due to a surge in hiring; instead, they generally have dropped because of discouraged workers being eliminated from headline labor-force accounting.”

Williams has demonstrated that it takes an expert to truly decipher BLS unemployment statistics. For instance, in a table titled “Alternative measures of labor underutilization,” the BLS reports what is known as “U6 unemployment.”

The U6 unemployment rate is the BLS’s broadest measure. It includes those marginally attached to the labor force and the “under-employed,” those who have accepted part-time jobs when they are really looking for full-time employment. Also included are short-term discouraged workers, those who have not looked for work in the last year because they have become convinced there are no jobs to be found.

Since 1994, however, the long-term discouraged workers, those who have been discouraged for more than one year, have been excluded from all government data.

While the BLS was reporting seasonally adjusted headline unemployment in July of only 7.4 percent, it also was reporting the broader U6 seasonally adjusted unemployment was 14percent.

In his subscription newsletter, Williams has urged caution in interpreting BLS statistics: “To the extent that there is any significance in the monthly reporting, it is that the economy is not in recovery, and that unemployment has made a new high, at a level that rivals any other downturn of the post-Great Depression era.”

The only measure BLS reports to the public, as the official monthly unemployment rate, is the seasonally adjusted U3 number.

Williams calculates his “ShadowStats Alternative Unemployment Rate” by adding to the BLS U6 numbers the long-term discouraged workers.

Williams argues that his ShadowStats Alternative Unemployment measure most closely mirrors common experience.

“If you were to survey everyone in the country as to whether they were employed or unemployed, without qualification as to when they last looked for a job, the resulting unemployment rate would be close to the ShadowStats estimate,” Williams explained to WND.

The headline BLS unemployment rate has stayed relatively low because it excludes all discouraged workers, Williams argues.

As the unemployed first become discouraged and then disappear into the long-term discouraged category, they also vanish from inclusion in the headline labor force numbers. Those workers still are there, however, ready to take a job if one becomes available. They are unemployed and consider themselves to be unemployed, but the government’s popularly followed unemployment reporting ignores them completely.

Below is a more complete unemployment table that includes the seasonally adjusted unemployment percentages for U3 unemployment, as well as the same for U6 unemployment, followed by the ShadowStats Alternative Unemployment rate for both July 2012 and July 2013, the most recent month for which Williams has calculated his ShadowStats Alternative Unemployment Rate.

The higher alternative unemployment rate for August relative to the BLS percentages reflects an increasing tendency by the BLS to add to the “not in the labor force” total to depress unemployment percentages reported in the U3 and U6 calculations.

Increasingly, critics like Williams believe the seasonally adjusted U3 numbers reported by the BLS as the official monthly unemployment rate do not give a reliable picture of the true magnitude of unemployment in the United States.

The definitions used by the BLS exclude from the calculation of the monthly U3 unemployment rate anyone who has not looked for work at any time during the past four weeks.

In the U6 calculations, the inclusion of discouraged workers extends only to those who have actively looked for work in the past year.

The BLS definitions exclude from the definition of unemployed those who have grown so discouraged that they have not actively lookedfor work in the past year, without distinguishing those who would look for work if there were a reasonable chance their job search might result in employment.

Under Obama, an economy of part-time jobs

WND also reported last month that under the Obama administration, the U.S. is rapidly transforming from a nation of full-time employment to a nation of part-time employment. Seven out of eight jobs created during Obama’s five years as president have been part-time jobs.

The House Ways and Means Committee noted Aug. 5 that approximately 88 percent of the jobs created under President Obama have been part-time jobs.

“The reality, as you dig into the latest jobs data, reveals that few are finding the full-time work they want and need, and many are forced to accept part-time employment,” the committee said.

The BLS statistics show that under Obama, 1,882,000 part-time jobs have been created, compared to only 270,000 full-time jobs created between January 2009 and July 2013.

On Aug. 21, Reuters reported that three out of four of the nearly 1 million jobs created this year are part-time, with many of the jobs low-paid, a phenomenon Reuters attributed to an unanticipated adverse economic impact of Obamacare.

“Faltering economic growth at home and abroad and concern that President Barack Obama’s signature health care law will drive up business costs are behind the wariness about taking on full-time staff, executives at staffing and payroll firms say,” Reuters reported.

“Employers say part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them curb costs they might face under the Affordable Care Act, also known as Obamacare.”

Reuters pointed out that the growing tendency to create part-time jobs instead of full-time jobs causes a vicious cycle in which the new employees who tend to be hired in retail businesses and food services do not have the disposable income to drive demand for goods and services in the economy as a whole.