More Jobs Lost. Unemployment Down. What Gives?

By: Brian Montopoli
Topics: Jobs

4963930A Labor Department report out this morning found that employees cut 247,000 jobs in July. While this was relatively good news – it represented the fewest lost jobs in a year – it still meant nearly 250,000 jobs lost for the month. Yet the unemployment rate actually fell, from 9.5 to 9.4 percent.

Which may leave one asking: Why did the unemployment rate fall even as more jobs were lost?

The short answer is that the labor force shrunk. David Wyss, chief economist for Standard & Poor's, suggested that students who had been looking for summer jobs essentially gave up, moving them out of the category of unemployed. (They were no longer looking for work, after all.)

"If they haven't found something by the Fourth of July, they spend the rest of the summer at the beach," he said.

The Wall Street Journal's Sudeep Reddy offered the longer answer to this question in a blog post:

The payroll figures — jobs lost — comes from a Labor Department survey of employers. The unemployment rate is measured through a separate survey of households — asking people whether they have a job, whether they want a job and whether they searched for a job (among other things). If people drop out of the labor force, the unemployment rate can decline because fewer people would be considered jobless.

The July household survey showed the civilian labor force shrinking by 422,000 and employment falling 155,000. That translated into 267,000 fewer people listed as unemployed. The labor-force participation rate fell 0.2 percentage point in July to 65.5%

As Reddy notes, the decline in the unemployment rate doesn't mean unemployment won't hit 10 percent – in part because signs of improvement in the economy may result in more people entering the workforce, expanding its size overall and effectively pushing the unemployment rate up.

Brian Montopoli
Brian Montopoli is the senior political reporter at CBSNews.com.
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by stlwest August 7, 2009 3:18 PM EDT: CONSTITUTIONAL CONVENTIONS ARE COMING YOU INFLATAHOLIC OVERSPENDING SUPPOSED REPRESENTATIVES OF THE PEOPLE. CALL OR WRITE YOUR GOVENOR AND ASK THEM TO CALL FOR A CONSTITUTIONAL CONVENTION. WE THE PEOPLE MUST ACT TO KEEP CONGRESS FROM STEALING OUR MONEY AND GIVING IT TO THIER POLITICAL SPONSORS.; Reply to this comment


by orwell101 August 7, 2009 2:32 PM EDT: It's much worse than that!
If the Inner Party (Dems and Repubs) don't like the unemployment figures just have the Labor Department muddy the waters a bit. Just use the try and true statistical and deceptive methods we have had around for a long time. Very few of the media will ever catch on and the others will be too scared to report on it (25% of the reporters in the US have been laid off or fired in the last 2 years).
Inconvenient Items:
1. Those people on Extended Benefits (EB) are not found in the figure reported above. I called the labor dept and one expert told me they are listed under another category.
2. "The payroll figures ? jobs lost ? comes from a Labor Department survey of employers. The unemployment rate is measured through a separate survey of households ? asking people whether they have a job, whether they want a job and whether they searched for a job (among other things). If people drop out of the labor force, the unemployment rate can decline because fewer people would be considered jobless." (Did they really "drop" out or where they pushed out).

"The July household survey showed the civilian labor force shrinking by 422,000 and employment falling 155,000. That translated into 267,000 fewer people listed as unemployed. The labor-force participation rate fell 0.2 percentage point in July to 65.5 %"
(thanks to the Wall Street Journal for this item).

3. There is also the inconvenient Labor Dept U-7 report level that includes so-called "discouraged" workers" (see above) (3-4% or more of additional unemployment). The U-7 levels are given short shrift in most of the media who only report the figure that comes out at the beginning of the month.
4. Other lies, distortions, and half-truths using statistics and
sleight of hand by the people who have a legal responsibility to report unemployment figures accurately and a media who don't take their job seriously or who have been recently laid off themselves, and politicians who have bigger noses than Pinocchio.
Bottom Line:
Want to know what the real U.S. Unemployment rate is: JUST DOUBLE ANY NUMBER THEY FEED YOU!
Also Employment Speak 17.1 is very popular this month with politicians and hack media people. (Past Erased and outdated examples of Employment Speak 4.3 and 16.4:"Happy days are here again?, "Prosperity is right around the corner", "We now have a good excuse to not pass additional Unemployment Extended Benefits so we can give your local banker a one trillion dollar gift"); Reply to this comment


by cebling-2009 August 7, 2009 11:30 AM EDT: As Will Rogers once said, ?there are lies, damn lies, and statistics?. It?s all in what you measure and how you measure it. Still I believe that all of the evidence taken together suggests that the economic ship is starting to turn.; Reply to this comment