Today nonfarm payroll report showed unemployment fall to 7.8% but that is not the real story. Remember that unemployment is not the percentage of the workforce that is unemployed, it is the percentage of the workforce on unemployment benefits. From last month to this month our workforce increased by 418,000 people and we created 114,000 jobs which means we still have 304,000 new workers that are without jobs. Because they are new to the workforce, they don’t qualify for unemployment and therefore are not in the unemployment percentage. This month we also saw 342,000 people lose their unemployment benefits not due to getting a job.
I think the number that should be reported is percentage of employed workers. If we look at the total number of people employed as a percentage of the workforce, this provides us a very different number. This number has been steadily getting worse and is at about 91% which would mean that 9% of the workforce is truly unemployed. This still does not account for the under employed or discouraged workers or those holding multiple jobs that would not be seen in that data either. My data source www.bls.gov (just dig a little deeper into the numbers)