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The unemployment report released by the Bureau of Labor Statistics (BLS) today showed a .3 percent decrease in unemployment from 8.1 percent in August to 7.8 percent for September.
This will no doubt be a cause for celebration among supporters of the president's agenda. However, those who are really monitoring the vitality of the US economy won't be so quick to jump for joy.
The official unemployment rate is just one of the statistics issued by the BLS's Employment Situation Summary for September 2012. A closer analysis of the report reveals that there is still much to be concerned about.
Alternative Measures of Labor Underutilization
The BLS actually monitors 6 seperate unemployment rates, labeled U-1 through U-6. The "official" unemployment rate is the U-3 rate. This rate is determined by calculating the percentage of people who are not employed but are part of the civilian labor force.
In September, the total percentage of people participating in the civilian labor force was roughly 63.6 percent of the total population. The percentage of the population employed for the purpose of the U-3 rate was 58.7. This means that 92.2 percent (58.7/63.6) of workers looking for work over the past month could find work. Therefore the remaining, the U-3 rate, was equal to 7.8 percent.
This is where the Obama administration stops talking.
There are two very important statistics that they don't want you to know about.
The first statistic is the Net Labor Force Participation Rate.
The following chart shows Net Labor Force Participation since 1980:
Participation in labor force, the statistic used to calculate U-3 unemployment, is at it's lowest level since the Carter Administration. The rate has plummeted a full two points since Obama has taken office.
In plain English, the official unemployment rate does not count people who have stopped looking for work for at least a month. If the same percentage of people were still looking for work today as were when Obama assumed office, the employment rate would be 89.4 percent (58.7/65.7), thus resulting in a 10.6 percent U-3, official, unemployment rate.
The other statistic that they don't want you to see they do a slightly worse job hiding. This figure is the U-6 Unemployment Rate.
The U-6 is appropriately named because its almost double the U-3 rate. The current U-6 rate is 14.7 percent, unchanged from August to September.
The U-6 is calculated by combining a portion of those who have stopped looking (only those who have looked at least once in the past year) and factors in the number of people who are employed, but are statistically under-employed. Under-employed means that they are working below their skill level and/or part time.
In plain English, the U-6 rate tells us that 14.7 percent of those who have looked for work in the past year A. haven't found and job or B. have found a job but it is work that they are overqualified for and/or C. is part time.
With millions that have given up HOPE (cough cough) looking for work because of the state of the economy, decide for yourself whether or not the fact that 7.8 percent of people that looked for work over the last month couldn't even find part time work is really something to gloat about.