Yesterday the government released the latest jobs report, and it showed that 243 thousand jobs were added in January and the unemployment rate fell to 8.3 percent. And as the President crowed incessantly about an unemployment rate that is substantially higher than it was three years ago when he took office, I had a few questions.
The report showed that small business hiring remained stagnant while larger corporations like Kraft and others have actually laid off workers. So I wonder, from where did all the new jobs come. When one examines the raw data from the Department of Labor Statistics, one stands out above all others. At the end of December, 2011, there were approximately 132 million people working in the U.S. At the end of January, 2012, the number of working people in the U.S. had dropped to approximately 130 million. Meaning that approximately 2 million jobs were lost. Of course this number represents a result before the seasonal adjustment and other government mathematical manipulations.
Another data point that is worth reviewing is the labor participation rate, which is the percentage of the adult population that is employed. This number is the lowest it has been in decades and has dropped a whopping four percent since President Obama was inaugurated. This fact, along with the record number of people receiving unemployment benefits for more than 27 weeks and record numbers of people working part time jobs who wish to work full time, is not illustrative of a recovering economy. Since President Obama has started his term, 14 million people have been added to the food stamp rolls.
So how, you may ask, did the economy add jobs and reduce the unemployment rate? The Department of Labor statistics has two important unemployment numbers, the U-3 and the U-6. The U-3 number is the adjusted and manipulated figure and the U-6 is the total number of unemployed. The U-6 number counts those who have come to the end of their unemployment benefits as well as those who have given up looking for employment. This number is often called the "real" unemployment number and is currently at 15.1 percent. What the current administration does, which none before them have, is to add those who have given up looking for work and those who have run out of unemployment benefits to the number of jobs actually created in a month. This has the result of reducing the universe of jobs available and thereby reducing the unemployment rate.
Recently, the Fed chairman and the Congressional Budget Office have reported that the economy is in dire shape. These reports, along with the statistics I have outlined above, illustrate that the man behind the curtain isn't fooling anyone. Except the munchkins who hang on his every word.