The unemployment rate is published by the Bureau of Labor Statistics, a division of the US Department of Labor. The rate is found by dividing the number of unemployed by the total civilian labor force. On February 7th, 2014, the BLS published the most recent unemployment rate for January, 2014 of 6.6% (actually it is 6.584%, down .097% from 6.681% in December, 2013).
The unemployment rate was determined by dividing the unemployed of 10,236,000 (—down from the month before by 115,000—since January, 2013 this number has decreased by 2,079,000) by the total civilian labor force of 155,460,000 (up by 523,000 from December, 2013). Since January 2013, our total civilian labor force has decreased by 239,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 246,915,000. In one year’s time this population has increased by 2,252,000. This is an increase of 170,000 from last month’s increase. The Civilian Noninstitutional Population has increased each month…
Up from December 2013 by 170,000
Up from November 2013 by 178,000
Up from October 2013 by 186,000
Up from September 2013 by 213,000
Up from August 2013 by 209,000
Up from July 2013 by 203,000
Up from June 2013 by 204,000
Up from May 2013 by 189,000
Up from April 2013 by 188,000
Up from March 2013 by 180,000
Up from February 2013 by 167,000
Up from January 2013 by 165,000
Up from December 2012 by 313,000
Up from November 2012 by 176,000
Up from October 2012 by 191,000
Up from September 2012 by 211,000
Up from August 2012 by 206,000
Up from July 2012 by 212,000
Up from June 2012 by 199,000
Up from May 2012 by 189,000
Up from April 2012 by 182,000
Up from March 2012 by 180,000
Up from February 2012 by 169,000
Up from January 2012 by 335,000
Up from December 2011 by 2,020,000
And this month the BLS has decreased the Civilian Labor Force to 155,460,000 (up from December by 523,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 91,455,000 ‘Not in Labor Force’—slightly better than last month’s 91,808,000. Since January, 2013, 2,492,000 US workers have vanished! Where did those 2,492,000 potential workers disappear to in one year’s time? I am assuming they still have to eat and pay their rent. They still need money, don’t they? The government tells us that these NILFs got discouraged and just gave up looking for a job. My monthly recurring question is: “If that is the case, how do they live when they don’t earn any money because they don’t have a job? Are they all relying on the government to support them??”
Our Employment Participation Rate—the population 16 years and older working or seeking work—rose .2% to 63.0%. This is the third lowest Employment Participation Rate recorded—since April 1978…just over one year into President Carter’s term of office, 36 years ago! One year ago, our Participation Rate in December was 63.6%.
Final take on these numbers: Fewer people looking for work will always bring down the unemployment rate.
Anyway, back to the point I am trying to make. On the surface, these new unemployment rates are scary, but let’s look a little deeper and consider some other numbers.
The unemployment rate includes all types of workers—construction workers, government workers, etc. We recruiters, on the other hand, mainly place management, professional and related types of workers. That unemployment rate in January was 3.1% (this rate rose .2% from last month’s 2.9%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in January was 3.2% (this rate fell .1% from last month’s 3.3%).
Now stay with me a little longer. This gets better. It’s important to understand (and none of the pundits mention this) that the unemployment rate, for many reasons, will never be 0%, no matter how good the economy is. Without boring you any more than I have already, let me add here that Milton Friedman (the renowned Nobel Prize-winning economist), is famous for the theory of the “natural rate of unemployment” (or the term he preferred, NAIRU, which is the acronym for Non-Accelerating Inflation Rate of Unemployment). Basically, this theory states that full employment presupposes an ‘unavoidable and acceptable’ unemployment rate of somewhere between 4-6% with it. Economists often settle on 5%, although the “New Normal Unemployment Rate” has been suggested to fall at 6.7%.
Nevertheless (if you will allow me to apply a ‘macro’ concept to a ‘micro’ issue), if this rate is applied to our main category of Management, Professional and Related types of potential recruits, and/or our other main category of College-Degreed potential recruits, we are below the 4-6% threshold for full employment…we find no unemployment! None! Zilch!