The latest jobs report indicates that the unemployment and job creation rates are better than a year ago, but there are problems with the numbers.
By Les Leopold
I’m here to confirm everyone’s gut sense that the way the government measures unemployment is a lie, and it matters.
The latest statistics compiled by the Bureau of Labor Statistics (BLS) indicate the unemployment rate is 8.9 percent and the economy added 192,000 jobs in February. Yes, that’s better than a year ago when the rate peaked at 10.4 percent and we lost 35,000 jobs.
But there are two big problems with those numbers:
First let’s look more closely at the 192,000 new jobs that were created last month. It’s seems like a good looking number – like filling up two big football stadiums with people and giving them all jobs. But not quite. We need about 100,000 new jobs a month just to keep up with population growth. That means we can only move toward full employment if the economy creates many more than 100,000 new jobs a month. So in effect, one of those football stadiums each month is mostly filled with young people just coming into the labor force. And the other football stadium in February seats the 92,000 unemployed folks who actually found new jobs.
The pathetic pace of job creation
Since November when jobs growth started again, the economy has added an average of 136,000 jobs a month. Take out the 100,000 for new workers and it means we’re gaining ground on full-employment at only 36,000 jobs a month.
How far do we have to go? Using the most conservative numbers, we’re still down 7.5 million jobs since December 2007, when the Wall Street crash really started wrecking the rest of the economy. Do the math. Divide 7.5 million jobs lost by 36,000 per month of net new job growth and you get a little over 208 months or 17.4 years until we get back to pre-crash levels. That’s an entire generation! And that assumes we won’t have another recession or Wall Street crash. Fat chance.
But the darkest data buried in the BLS statistics, and in numbers the media tends to ignore because they don’t understand them –and they are numbers that are truly frightening– have to do with the long-term unemployed and the people who have given up looking for work.