Don't be fooled by unemployment holding at 10%
This morning, the Labor Department reported that the official U.S. unemployment rate for December was 10 percent, a figure that was unchanged from November.
Some are looking at this figure optimistically, suggesting that it shows unemployment has peaked at 10 percent and should start falling.
But you should not be fooled by their optimism. The December number is a fluke, a statistical anomaly like the one that occurred in July, and here's why: The job-hunting situation has gotten so bad that an additional 661,000 unemployed gave up looking for work last month and checked out of the job force.
Because of the way the Labor Department's Bureau of Labor Statistics arrives at the official unemployment figure, those 661,000 are not officially counted as "unemployed," if you can believe it. See, you're considered "unemployed" only if you don't have a job and you're looking for one. If you've given up looking altogether you still don't have a job. But hey, at least in the eyes of the Labor Department, you're no longer "unemployed." Which doesn't do anything for your wallet but may boost your self-esteem.
As economist Heidi Shierholz of the liberal Economic Policy Institute writes today: "If these workers had stayed in the labor force (and thus counted among the unemployed), the unemployment rate would have risen to 10.4%."
Repeat: 10.4 percent.
This exit of 661,000 unemployed last month was a big one, the biggest in more than a year.
As I write every month -- and indeed, wrote again here today -- a truer measure of the U.S. unemployment rate figures in Americans who have given up looking for work and those who want full-time jobs but can only find part-time work. That truer, albeit unofficial, rate came in at 17.3 percent, up from last month.
Turns out, even the government's official unemployment rate is a lowball figure.
-- Frank Ahrens
Follow me on Twitter at @theticker
January 8, 2010; 2:15 PM ET
Categories: The Ticker , Unemployment | Tags: BLS, jobless rate, unemployment
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