Last week, as it does every first Friday of the month, the November jobs report came out. And it was pretty good. Unemployment is at 4.6%, over 175,000 jobs were created, and the U-6 unemployment rate (what some call the real unemployment rate) was down to 9.3%. There have been 74 months of job growth, much better than what we had in 2008. All of those are good numbers. However, like any good numbers there also some negatives. One of those is the labor participation rate, which was 62.7%. In other words, about 63% of the 255 million people who are of working capacity were actually doing so.
I bring this up for a couple of reasons. First, I am a scholar of language and how we use it. One of the things I love to teach my students is about the rhetoric of definition. How we define things is extremely important. How we define our job title, our purpose, our specific goals, are all parts of some kind of definition.
One specific definition, however, that I have heard bandied about in the political atmosphere and on the campaign trail is how the economy is, in reality, in a depression. One of the pieces of evidence that some use is the 94 million statistic.
So remember that 62.7% labor participation rate, which means that over 155 million people are employed. However, that also means about 94 million or so are not. People who cite this statistic, particularly those opposed to President Obama and even other Republicans, claim the economy is in shambles.
I write this post, partly, because I heard it brought up in the personal finance world this weekend as I was listening to a money show on the radio. One of the callers was basically calling out the host, Bob Brinker, for casting a fairly rosy light on the economy. As part of his evidence he used this 94 million figure.
I have heard this bandied about from other people as well.
So I figured why not write a post about it, just for the helluva it.
94 Million People Out of Work?
So to begin: are there 94 million people who are not working? Short answer: Yes. That is true.
BUT….and this is a big BUT…what people don’t point out is if those 94 million people want or should be working.
Let’s start with the labor participation rate.
The labor participation rate has never been above 67% in this country since they started calculating it in the 1950s. So that means TENS of millions of able-bodied Americans haven’t been working for decades. By that logic, America has been in an economic depression for decades, perhaps since the beginning of the modern industrial economy.
However, I think most of us would be hard pressed to call the 1950s, 60s, 80s, and 90s, years of depression.
What Does It Mean?
So then let’s go to that 94 million statistic. How do they calculate that figure?
Well, about 88 million of that 94 million actually don’t want to work. For a number of reasons and they are four-fold. That 88 million is made up of students (typically high-school/college), people who are retired, people who are taking care of children/parent, and people who are disabled. Out of those 94 million about 6 million people are actually looking/want to work.
Former British Prime Minister Benjamin Disraeli said it best, there are “lies, damn lies, and then there are statistics.”
So there are not 94 million people who are unemployed. We are not in a great depression and the unemployment rate is not 38%. Does that mean everything is rosy? Certainly not, but I am tired of this stupid statistic being thrown around the internet like it is gospel truth.
Sometimes you have to fight one reality construction with another.