The Department of Labor reported that unemployment fell to 8.1 percent for the month of April – down from 8.2 percent in March.
In viewing their News Release on the DOL website, they present a positive picture of continued progress. The White House said the latest numbers are further evidence the economy is continuing to heal, but that “much more remains to be done to repair the damage caused by the financial crisis and the deep recession.”
But is the economy really continuing to heal and is the picture as positive as painted by the DOL?
Only 115,000,000 jobs were added during the month, not enough to drive down the unemployment rate. Instead, the rate went down because 342,000 people left the labor force – gave up looking for jobs. These people are not included in the calculation for unemployment.
More troubling is that the labor force participation rate – a key metric – remains at a 30-year low. And in April this metric further declined from 63.8 percent to 63.6. This means there are fewer taxpayers to support government programs including the growing number of people needing unemployment assistance, food stamps and other financial help, as well as the increasing number transitioning to federal entitlement benefits.
Not to make the picture any gloomier, but the unemployment rate for workers under age 25 is 16.4 percent, twice as high as the national average. Earn a college degree and the situation improves, but getting your foot in the door of a decent paying job can still be extremely difficult.
And those with student loans already owe an average of nearly $30,000 when they finish college. This is in addition to their taxpayer share of the national debt – over $50,000.
It is almost a certainty that the “reported” unemployment rate will be below 8 percent before the November election. For some politicians this is the key metric, one they will leverage for personal gain as evidence we are on the right economic path – that their policies have been successful.
However, for the growing millions of people who have given up trying to find a job or cannot find a decent paying job after completing their education, it’s a different picture. The same applies to those who are under-employed or must work multiple lower paying jobs in order to keep their heads above water.
None of these people or their challenges are factored into the “reported” unemployment rate, so be cautious, and look deeper if any politician presents the declining unemployment rate (soon to be below 8 percent) as the picture and proof of policy success.