More on the Bad Jobs Report
In June, the labor force — the total number of people either working or looking for work — was 153.74 million. The number of unemployed people was 14.62 million. Ergo, the unemployment rate was 9.5 percent.
But the number of people in the labor force — which normally goes up by about 100,000 people a month — actually declined in June. And it declined a lot — by 652,000 people. Some of those people moved, or retired, or left the country. But, as any economist would tell you, a big proportion of them were likely “discouraged” out of the labor force. They had looked for jobs, couldn’t find one and decided to stop trying. Let’s say none of those people left the labor force, and instead kept looking for a job for another month. In that scenario, we would add those 652,000 people to both the number of unemployed and to the labor force. And we would get an unemployment rate of 9.9 percent — higher than in May.
Of course, this is hypothetical, and does not take into account the impact of census hiring or retirement or a dozen other factors. My point is that the big fall in the unemployment rate is not really telling us about the job market in this specific month’s report, and the job market remains extremely distressed.