By Jack J. Kelly
Are we being told the real truth about the employment rate or are we being fed fake data designed to make things seem better than what they are?
Today, the mass media and President Trump excitedly applauded the release of the unemployment rate, 3.95, which is the lowest in almost 20 years.
To put the number into perspective, 5% is considered full employment. The reason for 5% is that statistically there will always be a certain amount of people who want to work, but are out of a job for a variety of reasons.
I’m not a mathematician, but since 3.95% is less than 5%, we should be ecstatic, right? Well, on the surface, it looks like great news, but when you dig a little deeper, there are other things to consider which dilute the applause.
Please keep this in mind, this is not a Trump thing, as almost all past Presidents have misrepresented the unemployment figures to make themselves look good. The US is said to have full employment with an unemployment rate of 3.9% percent, down from 9.8 percent in January 2010 (the midst of the financial crisis).
What the media and government are not telling us is that the wage growth is not budging and stubbornly remaining about the same. If more people are working, that should put pressure on companies to pay its employees more money. It’s simple supply and demand. As the supply decreases, it will take more money to entice them to work for you or retain them at your company. Conversely, if more are out of work and looking for jobs, companies could pay less since there are more people to choose from. But it is clear that wage growth is still tepid and doesn’t seem to be accelerating. It’s not logical to have both- greater employment and low wages. The very least is that we would see at least a nominal increase in pay.
What the government does not tell us is about the long-term decline in the labor force participation rate. The labor participation rate is a fancy-schmancy term used for the number of people either employed or actively looking for work.
Non-government reports and studies indicate an unusually large number of people have stopped looking for work and dropped out of the labor force at an unprecedented rate. In a bizarre government pretzel logic, if you have not looked for a job in the last four weeks, you are not counted as being unemployed and not considered in the work force. Conveniently, they won’t show up on the unemployment statistics. By not being counted, it looks like the economy is in much better shape than it really is and politicians can take credit for doing such a wonderful job. Interestingly, the US government does not bother to follow people that are out of the work force for more than one year. Poof, they just disappear from view. Estimates place these numbers at about 22 or 23 percent. The labor force participation rate is the lowest in 30 years. A precipitous fall in the participation rate is associated with recession or stagnation, not with an economic recovery.
Also, there does not seem to be any accounting for people who have become perpetual students going from college to graduate school, avoiding finding a job because there may not be jobs for PHD’s in Byzantine Medieval Poetry studies. Experienced professionals over 50 years-old who were forced into a so-called “retirement” are not counted either. Also, a large segment of the population is on some sort of questionable medical disability collecting money, as their work options have dwindled or are nonexistent. The statistics also fail to account for people who are working, but their jobs are far below their experience. These folks are taking McJobs and being paid far less than prior jobs.
Also, it is hard to find data on the number of workers that were displaced by corporations sending jobs to other countries or hiring cheaper labor with foreign workers on various visas.
To be fair- in full disclosure- I am not an economist, nor am I good at math, and my facts could be all wet. After all, I’m just a hack, blog writer and recruiter, so what do I know? If you disagree with my thesis, if nothing else, just look around at your family, friends, kids, people in your community, and listen to anecdotal stories. The feel and mood is that people are not too happy; many older people are out of work (or on their way out), working at a job beneath them, forced into an unwanted retirement, or downright dejected about their future prospects.
Instead of pretending everything is rosy, it would help if the government shared the real data, so that we could actually plan to really help people either find jobs or procure real jobs that are appropriate for their skills and experience.