The BLS made loud noises and went to the town shouting about the falling the official unemployment rate. The official unemployment rate fell to 5.5 % in February which may look very impressive on the surface. The figure looks even more impressive considering the fact that the economy has added more than 295,000 jobs last month. However when you take other factors like the labor participation rate and the “marginally attached” are taken into account, the situation does not look very re assuring. Experts are saying that the official unemployment numbers are “extremely misleading.”
Job hunters who became disillusioned and stopped looking for work in the four weeks preceding the unemployment survey are not counted by the Department of Labor in the official unemployment numbers.
As Gallup CEO Jim Clifton recently pointed out, “There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.”
The workers who are doing part time jobs but want to work full time are also considered as fully employed where was they should be considered as under employed.
The true unemployment rate is likely double the official number at any time, if not higher, notes Forbes.
The BLS also quips that the aging of the baby boom generation is a key factor affecting the labor force participation rate.
“In 2000, baby boomers were aged 36 to 54 years and were in the group with the highest participation rates: the prime-aged group 25 to 54 years old. The participation rate for women in this group was 76.7 percent and for men was 91.6 percent, so that the overall participation rate of the group was 84.0 percent. The participation rate of the next-older age group, that 55 years and older, was 32.4 percent, so the difference between the two age groups was 52 percentage points.”