Just back from a couple of weeks in the north woods, so it’s time to get caught up on things. First on the agenda is the May employment report, which was released a week ago. So the news is a little stale, but can’t be allowed to pass without comment since, as bad as the headline number was – only 38,000 jobs added to the economy – the reality of the situation is even worse.
Just how much worse didn’t hit home until I loaded the BLS (Bureau of Labor Statistics) data into my spreadsheet. The BLS tried to soften the blow of that headline number by claiming that unemployment actually dropped by a whopping three tenths of a percent to 4.7% – the lowest level since the onset of the “Great Recession” in late 2007. But nobody’s buying it, since it was done in the usual fashion (usual since President Obama took office) of using the “mysteriously vanishing labor force” trick once again, claiming that another 458,000 workers dropped out of the labor force, in spite of the fact that the population actually grew by 214,000 in May.
The Obama administration has transformed 100,000 into the new zero. What do I mean by that? It’s the methodology used to calculate employment and jobs added to the economy. When one full-time job is replaced by two part-time jobs, that counts as a gain of one job – one job lost, replaced by two jobs. Never mind the fact that no additional work is being done or that a well-paid worker with benefits has been replaced by lower-paid workers without benefits. And never mind the fact that performing one hour of work for some kind of compensation counts just the same as a full-time job. You may feel unemployed, but the BLS statistics don’t see it that way.
So when 38,000 jobs are added (according to the establishment survey, 26,000 according the household survey) then that’s really a loss of 62,000 jobs in the “100,000 is the new zero” economy – a truly recessionary figure. It’s no coincidence that, since the population grew by 214,000 people, meaning that the labor force, if truth be told, grew by about 107,000 people, the addition of 38,000 jobs to the economy means that it came up about 69,000 jobs short of keeping pace with the labor supply.
If the growth in the labor force in the BLS’s statistics kept pace with the growth in the population, then the real unemployment rate would have risen in May to 8.1%. This chart is a measure of just how heavily the Obama administration has leaned on the “mysteriously vanishing labor force” to make the unemployment rate appear artificially lower than it really is: Detachment from Reality Index. This index is a montly measure of how much the unemployment rate is distorted by the claim that the labor force has shrunk in the face of a growing population. In May the index was 3.4. Add 3.4 to the claimed unemployment rate of 4.7 and you arrive at a true unemployment rate of 8.1%.
May marked the second month in a row that per capita employment has contracted. It hasn’t contracted by three months in a row in over three years. It’s likely to happen in June. It hasn’t contracted four months in a row since October, 2009 – at the depth of the “Great Recession.” It looks likely that it will in July.
In the wake of the decline in per capita GDP in the first quarter, evidence that the U.S. is slowly sinking back into recession is mounting.