Counting the number of unemployed has always depended on who you include and who you leave out. And to be unemployed you must want a job and be looking for a job. If you are no longer looking even if you would like a job, then you are no longer officially unemployed. Which gets us to the statistic above from this article: It’s Time To Dump The Unemployment Rate. Begin with this:
The July jobs report was a good one, and the unemployment rate held steady at 4.9%, which in the past would have been sure signs of a robust economy. So why is the country in such a bad mood?
An unemployment rate below 5% is a relatively rare thing. Only twice before in the past 40 years has it dropped that low — once in the late 1990s during that economic boom, and again briefly in 2006-2007.
Yet unlike before, there is little joy in Mudville today. Instead of confidence and optimism, there is only malaise.
So look at the “real” unemployment rate in the chart. What is real about it is that it is measured based on a constant participation rate. It adjusts for the fact that people might drop out of the labour force because they have given up hope of finding a job. To quote from the article:
Put simply, what’s happened is that the official unemployment number has grown increasingly useless as a reliable economic indicator, for the simple reason that millions of people have simply quit looking for a job. Since the unemployment rate is based only on those who are actively looking for work, the more people who drop out of the labor force, the lower the unemployment rate becomes.
Up until 2010 that didn’t matter much, since the “labor force participation rate” was relatively steady. But during the Obama “recovery,” that’s changed. As the economy has slogged along for the last seven years, millions of non-elderly workers have given up looking for jobs entirely.
Employment stagnating in just the same way as has GDP. And this is with the supposed stimulus of continuing budget deficits and interest rates at zero. And all economists can think to do is to increase public spending and find some way to contrive to lower interest rates even more.