By Joseph Weber
Published May 10, 2012
April 1: An unemployed man looks at job listings in Menlo Park, Calif. (AP)
The Labor Department every month publishes the nation’s unemployment rate, which is now hovering at roughly 8 percent after peaking at more than 10 percent in 2009.
But is that decline a result of thousands of Americans going back to work — or thousands throwing in the towel on the job hunt?
The answer lies in the numbers.
If the percentage of adult Americans in the labor force — that being the total number of people who are employed or looking for work — were the same as it was during the end of the Bush administration, the April jobless rate would be at 11.1 percent.
That’s 3 percentage points higher than the 8.1 percent reported by the Bureau of Labor Statistics this month.
The agency’s official monthly unemployment number is calculated by dividing the number of unemployed into the number of working-age Americans who either have a job or are looking for one.
However, a statistic known as the “labor force participation rate” is key. That’s the percentage of the adult population that is employed or looking for work — in other words, the labor force. The lower the number, the worse the employment situation.
And it’s a figure that’s been trending steadily downward over the past decade. The lower number reflects a startling reality — a smaller share of the working-age population is looking for work.
It was 67.3 percent when George W. Bush took office in 2001, and down to 65.5 percent when President Obama took office in 2009.
The rate was all the way down to 58.4 percent in April 2011 and, after increasing slightly, returned last month again to 58.4 percent, according to the federal government.
When potential workers give up that job hunt, the official unemployment number tends to improve. This helps explain how the economy added just 115,00 jobs from March to April while the unemployment rate went from 8.2 percent to 8.1 percent. Yet over the same period, 342,000 job seekers stopped looking for work.
Throw that scenario back to early 2009, and we’d be talking about an 11.1 percent jobless rate. Reach all the way back to the employment picture for when Bush took office, and the rate would be more like 13.1 percent.
“We need to look beyond the official number,” Aparna Mathur, an economist with the Washington-based American Enterprise Institute, said Thursday.
Experts point out Americans leaving the job market is at least a decade-long trend that did not start with President Obama, and attribute the situation largely to baby boomers retiring early.
Mathur said that is only part of the picture.
“It’s not purely a trending down of the people in the higher age groups,” she said. Mathur said both extremes of the workforce — older workers and college graduates — tend to exit the market during tough economic times. Those close to retirement give up after months, even years of no success. And college graduates, without the responsibility of supporting a family, can make choices like graduate school.
Republicans have hammered the trend of people quitting the job hunt, as they push back on claims that the economy is brightening.
“The reason you’re seeing the unemployment rate go down is because you have more people dropping out of the workforce than you have getting jobs,” GOP presidential candidate Mitt Romney said Friday on Fox News, after the April numbers were released. “It’s a terrible and disappointing report this morning.”
Romney said Americans are concerned because the economic recovery appears to be slowing down, not accelerating.
“This is not progress,” he said.