Unemployment Rate Down - Not Necessarily Good News

I have thought for many years that the "unemployment rate" was not a very useful statistic. It doesn't tell us much about the real world of jobs in this country, and when looked at alone, can convey the absolutely wrong impression.

Dylan Matthews of the Washington Post gives a good explanation why last Friday's employment report, showing reduced unemployment, is not good news. As usual, the devil is in the details.

In a nutshell, the unemployment rate is down because of the large number of jobless people who have given up looking.

Jared Bernstein reports that the reduced unemployment rate is "due to a decline in the share of the population in the labor force, which ticked down two-tenths of a percent, to 63.2%, its lowest level since the summer of 1978, according to MarketWatch.com."

Dylan Matthews' article includes a very  illuminating graph:



As the graph shows, the only age group for which the labor participation rate is up is the age group that should already be retired. But many can't afford to retire, so hold on to their jobs as long as they can.

So much for the golden years.

Jared Bernstein has some more thoughts worth considering. He draws particular attention to the fact that since June of 2009, when the present "recovery" began, there has been a significant decline in public sector employment, unlike the recoveries beginning in 1991 and 2001. Without that loss of jobs in the public sector, our overall unemployment rate would be less than 7%. Still not great by historical standards, but better than now.