Jobs report not as good as the unemployment rate implies

Being the lazy person that I am and not wanting to reinvent the wheel, I decided to wait until some other blogger analyzed the latest employment report data. The people at No Money No Worries explains how today’s report showed a small increase in jobs but a large decline in the unemployment rate:

Today’s unemployment headline proclaims that the “Unemployment Rate Falls to 9.0%.” However, the number of nonfarm jobs increased very little (+36,000).

So, unless we’ve all changed careers to become farmers, something doesn’t add up.

All else being equal – with roughly 153 million in the US labor force – a 0.1% drop in the unemployment rate would require the creation of 153,000 jobs. A decline of 0.4% would require payroll employment to increase by 4x that amount, or 612,000 jobs.

So, one suspects that the headline unemployment rate fell because these workers dropped out of the labor force entirely – and BLS data confirms that is indeed what happened.

According to the BLS, the civilian labor force in Dec 10 was 153,690,000.  January 2011′s dropped to 153,186,000 – a difference of 504,000 workers.

So, to sum it up, the 0.4% drop in unemployment was due to:

1.   36,000 new jobs; and

2. 504,000 workers dropping out of the labor force.

Not exactly a stellar report.

I think that sums it up well. If you enjoy economics and statistics (and some cool charts), I highly recommend No Money No Worries.

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3 responses to “Jobs report not as good as the unemployment rate implies

  1. Pingback: Jobs reports: US versus Canada | The Path to Tyranny Blog

  2. Pingback: Tweets that mention Jobs report not as good as the unemployment rate implies | The Path to Tyranny Blog -- Topsy.com

  3. Thanks to CR for an honest jobs report for a change. I have read in many places that the current U-6 number is much closer to how they tracked unemployment in the 30’s than the U-3 number we use now. It would really interesting to see a comparison of the current U-6 Unemployment with that of the 1930’s (Great Depression) unemployment. as I

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