Are Feds "Disappearing" Workers To Make Job Statistics Look Better?

The Bureau of Labor Statistics will as usual release its monthly report Friday on how many jobs were gained in April and on the official rate of unemployment. It’s not likely to be an especially encouraging announcement. The best that can be said at this point is that it probably won’t be as gloomy as the report for March. But you can never be sure.

One of the first places beneath the headlines that many analysts—professionals and amateurs alike—will look to get a better handle on the report is the labor-force participation rate. That rate has taken a nose-dive over the past five-and-a-half years, down from 66.0 percent to 63.3 percent, the lowest since May 1979. There’s a dispute over the status of who makes up the millions represented by that 2.7 percent drop. And thus a dispute over how serious it is and what should or can be done about it.

First, a definition: The labor-force participation rate measures the percentage of working-age adults who either have a full- or part-time job or are actively looking for one. Since the 1950s—when women started entering the labor force in large numbers and by the mid-’90s doubled the percentage who had been working in 1948—the participation rate had been steadily rising, interrupted only by recessions. As people were laid off during those economic downturns, the LFPR naturally fell as jobs became scarcer but then recovered as the economy improved.

At least it was that way until the recession of 2001 witnessed a change in this decades-old pattern. The LPFR fell and then began recovering as usual. But by the time the 2007 recession began, it was still a full percentage point short of its 2000 peak of 67.3 percent. And now it’s four points below that peak.

This plunge has produced a vast cohort of “missing workers.”

“Missing,” as in people who would be in the labor force if they thought they had a chance of getting a job. But they don’t think they have a chance, so they’ve dropped out and aren’t counted as unemployed. They aren’t really missing, of course. They have instead been statistically disappeared. Out of sight, out of the headlines, off the minds of policymakers who, these days, would rather muck around with deficit-driven budgeting instead of stimulating the economy to get these millions of Americans earning a paycheck again.

The financial and psychological battering of these once-were and would-be-again workers is obviously huge. But the statistical effect is also big. If they were still in the labor force, being counted by the BLS each month, the unemployment rate would be higher—perhaps nine-plus percent—and the sluggish economy would look even unhealthier than it already does. Which might, if Congress weren’t populated by so many corrupt puppets and wimps, actually spur some fixes. (Yes, I’m a dreamer.)

But while most politicians conveniently ignore the troubles caused the extended drop in the labor force, there is, as noted above, a dispute among economic analysts about the overall composition of the workers who have left.

Please read more about missing workers below the fold. MOREHERE