This article by Daniel Amerman (rated as a “must read” by Yves Smith in her Naked Capitalism blog today) examines in excruciating detail the government’s manipulation of unemployment statistics to make the rate look lower than it actually is, to make it appear to be falling when it is actually rising:
When we look at broad measures of jobs and population, then the beginning of 2012 was one of the worst months in US history, with a total of 2.3 million people losing jobs or leaving the workforce in a single month. Yet, the official unemployment rate showed a decline from 8.5% to 8.3% in January – and was such cheering news that it set off a stock rally.
How can there be such a stark contrast between the cheerful surface and an underlying reality that is getting worse?
The true unemployment picture is hidden by essentially splitting jobless Americans up and putting them inside one of three different “boxes”: the official unemployment box, the full unemployment box, and the most obscure box, the workforce participation rate box.
… a detailed look at the government’s own data base shows that about 9 million people without jobs have been removed from the labor force simply by the government defining them as not being in the labor force anymore. Indeed – effectively all of the decreases in unemployment rate percentages since 2009 have come not from new jobs, but through reducing the workforce participation rate so that millions of jobless people are removed from the labor force by definition.
When we pierce through this statistical smoke and mirrors and factor back in those 9 million jobless whom the government has defined out of existence, then the true unemployment rate is 19.9% and rising, and not 8.3% and falling.