Friday, March 09, 2012

Unemployment and the LFPR*

*Labor Force Participation Rate is the percentage of the civilian workforce that is actually employed or looking for work. On the chart below, notice the absolute crash in this rate since Barack Obama took office.  Although unemployment under Barack Obama has been high, it's actually gotten much worse since he took office, and that fact is not reported in the media.

This measurement is important, because a low participation rate hides a high unemployment rate. Here's an example of how that happens:

Under Bush
Out of 1000 people, 670 are in the workforce. 35 of those are unemployed. Unemployment rate = 5.2%.

Under Obama
Out of 1000 people, 637 are in the workforce (33 fewer than under Bush.) 53 of those are unemployed. Unemployment rate = 8.3%.

The 33 people no longer in the workforce? Although unemployed and able to work, they are no longer looking for jobs. They are no longer "in the workforce." They are simply ignored. They are not counted as part of the "official" unemployment figure. Add them back into the equation, and Obama's real unemployment rate is 15.2%, using the exact same calculation as used under Bush.

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