Or, call me at: Last week’s unemployment numbers were hailed in many corners as a sign of a improving economy, but if you peel back the spin and hype, the picture isn’t quite as rosy. Federal Reserve Chairman Ben Bernanke admitted as much in testimony before Congress this week. As it stands today, the official unemployment rate is 8.3%, but that number doesn’t accurately reflect what’s truly going on in the job market.
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From BusinessWeek.com:Federal Reserve Chairman Ben S. Bernanke said the 8.3 percent rate of unemployment in January understates weakness in the U.S. labor market.
“It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work,” Bernanke said today in response to questions at a hearing before the Senate Budget Committee in Washington. “There are also a lot of people who are either out of the labor force because they don’t think they can find work” or in part- time jobs.
This is the reason why the official unemployment rate has occasionally decreased in months where we’ve had a net loss in jobs. When people drop out of the labor force, it decreases the amount of people that are counted as unemployed by the government.
As Ezra Klein at the Washington Post points out, if you adjust the numbers to account for workers that have dropped out of the labor force because they’ve given up on finding work, the actual unemployment rate is north of 10%.
Make no mistake, Friday’s job numbers indicate that things are getting better, but they’re definitely still far from good. We’ve got a very long way to go before the job picture is looking good again.
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