NCPA - National Center for Policy Analysis

The Bad News Behind the January Jobs Report

February 13, 2012

The official unemployment rate remains high at 8.3 percent -- still a half a percentage point higher than when President Obama took office.  But that still might be looking at the bright side.  If we include those who have given up looking for work and those who could only find part time work, the unemployment rate stands at almost an entire percentage point higher than when Obama entered office, says economist John Lott.

  • In January 2009, 11.6 million Americans were out of work and 23 percent of them had been unemployed for more than six months.
  • Today there are 12.8 million unemployed and 43 percent have been out of a job for more than six months.
  • The average length of unemployment has increased dramatically since even the recovery started.
  • Back in June 2009, "only" 29 percent of the unemployed had been unemployed longer than six months.

The number of unemployed Americans last month fell by 339,000, the fifth largest drop since January 2009.  But there was an even much more shockingly large number -- almost 1.2 million additional Americans were classified in January as not being in the labor force.

This last number not only means that the official unemployment number is misleading, but it will also likely determine where the unemployment rate ultimately goes.  Indeed, the Congressional Budget Office (CBO) recently predicted that the unemployment rate will be at 8.9 percent during the last quarter of 2012 and rise to 9.2 percent for the last quarter of 2013.

The CBO was so concerned about these people leaving the labor force that they warned that the current unemployment rate that reporters so breathlessly await at the beginning of each month is quite misleading.

At the end of last year, the CBO cautioned that the official unemployment rate was about 1.25 percentage points lower than the real rate.  In January, that gap was about 1.6 percentage points.

Source: John Lott, "The Bad News Behind the January Jobs Report," Fox News, February 3, 2012.

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