Down the unemployment rabbit hole....

Earlier this week I was watching the CBS Evening News when Norah O'Donnell reported that the Labor Department reported the January unemployment rate is down to 3.9%. After the past 2 years and all the news about businesses looking for workers, I didn't know how to react to the news. At first, I thought it was great news but after a few minutes of thought, I started to be suspicious of the number. By the next morning I decided to do a little investigation which sent me down a lengthy rabbit hole. I could not believe what I learned.

According to Census.gov, the total population in the United States in 2020 was 331.4 million people. In the same report, I learned that 77.9% or 258.3 million are aged 18 or above. This is considered the total American workforce. So, if you apply 3.9% to the 258.3 million available workers it means that a little over 10 million Americans are out of work. A fairly big number.

Unfortunately, the calculation is not this simple. There is another whole group of "missing" Americans. Missing is the word used in almost every article I uncovered during my journey. Using the simplest definition, if you are one of these 258.3 million Americans considered the "US workforce," but are not actively searching for work and not receiving unemployment benefits, you are not counted in the unemployment numbers. Every month when the new numbers are calculated by the Labor Department, any American who gave up looking for work for a period greater than four weeks is subtracted from the available workforce and not counted in the numbers.

So how many American workers are "missing" from the unemployment numbers. Its a BIG number!

After a number of clicks, I found the best information on the Federal Reserve of St Louis website. In August 1998, the US hit the highest level of participation in the workforce at a level of 76% of the roughly 258.3 million available workers. The reason I say roughly is because the population is larger now than it was in 1998 but I found it virtually impossible to find all these numbers in one spot. That means that in 1998, 196.3 million American were available to work. That means 62 million Americans 18 years old or over were not in the workforce. After more investigation, I found an article that notes that this group includes, students, stay-at-home moms, retirees, disabled Americans, prisoners and other Americans with a number of other reasons including those that have "just given up looking for a job". I could not find a definitive list of why a person 18 or over would be considered not able to work. According to the same website, I further learned that the percentage of available workers dropped to 57.5% in January. That means we are now at roughly 109.8 million Americans that are not included in the unemployment calculations. It is shocking for me to think that almost HALF of adult Americans aren't even considered a part of the eligible workforce.

The number was so high that I felt like I had to find some supporting evidence. I did find a couple of other websites that estimate that between 62% and 65% of the American workforce is considered in employment numbers. Although I am not a math genius, the numbers I saw match the Federal Reserve website. 62% would be 160 million which would result in 98.3 million not included in the employment numbers. As I mentioned, I found a few sites including the Washington Post that referenced the 160 million number. I also saw a couple of references to the December 2021 participation rate as 61.9% and a couple of other sites that indicated that since December as many as 5 to 10 million Americans have "given up" on looking for a job. If you go with the population at 258.3, every percentage number of drop off means another 2.6 million Americans have left the employment calculation pool.

While in the rabbit hole, I found another article by the Washington Post that indicated there are still 18.3 million Americans receiving unemployment benefits in January. I was able to confirm this number in a few other locations.

So, CBS reported the 3.9 % unemployment rate as a BIG WIN for the Biden Administration. There was no mention of the "missing" Americans in the report. I have two issues now that I am back out of the rabbit hole.

First, how can an American cultural icon with a track record like the one that CBS has feel good about such a misleading report? We have a huge problem in the US. If you use 258.3 million Americans as a constant for the size of the US workforce, we had 196 million workers in the US in 1998 (76%). By December 2021, the size of the workforce was down to 160 (62%) million workers! In January 2022 alone, another 12 million workers (57.5%) opted out of the workforce. Why is CBS celebrating a 3.9% unemployment rate (10 million workers) when there are far more workers receiving unemployment (46 million) or not even being counted in the number (some part of 109 million workers!)? Come on CBS! Mike Wallace, Morley Safer and Ed Bradley are turning in their graves!

My second issue is simple to say but much harder to fix. If you don't talk about the "missing" problem, how the heck are you going to fix it?

Let's start with why is this happening? I think I have an idea. Since the start of the pandemic, our government has provided assistance to workers who lost their jobs (a good thing) but I believe there are unintended consequences (many of those workers made more money from the assistance than from their jobs so there is no incentive to go back to work). According to another recent CBS report, most Americans received as much as $3200 in stimulus checks and another large group received another $300+ per child in the last nine months of 2021. Now, these same workers don't want to go back to work unless they can earn the same amount they "earned" from the government. That is why you see so many "help wanted" signs on the windows of restaurants and small businesses! There are other reasons. For example, moms with kids at home who have been banned from their schools have to stay home to care for their kids. Another unintended consequence of moving school to home.

So the next time I see an unemployment number published by the Labor Department, I am going to dig a little deeper to check on the number of Americans participating in that number!