The Official US Unemployment Number Only Tells Half the Story...

Mish Shedlock |

For the third consecutive month we see a strong headline payroll number. The Bloomberg Consensus estimate was 200,000 jobs and the headline total was 292,000. The unemployment rate meanwhile was steady to 5.0%, the lowest since April 2008.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +292,000 - Establishment Survey
  • Employment: +485,000 - Household Survey
  • Unemployment: -20,000 - Household Survey
  • Involuntary Part-Time Work: -63,000 - Household Survey
  • Voluntary Part-Time Work: +72,000 - Household Survey
  • Baseline Unemployment Rate: +0.0 at 5.0% - Household Survey
  • U-6 unemployment: +0.0 at 9.9% - Household Survey
  • Civilian Non-institutional Population: +189,000
  • Civilian Labor Force: +466,000 - Household Survey
  • Not in Labor Force: -277,000 - Household Survey
  • Participation Rate: +0.1 at 62.6 - Household Survey

Employment Report

Please consider the Bureau of Labor Statistics (BLS) Current Employment Report:

Total nonfarm payroll employment rose by 292,000 in December, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in several industries, led by professional and business services, construction, health care, and food services and drinking places. Mining employment continued to decline.

Unemployment Rate - Seasonally Adjusted

onfarm Employment Change from Previous Month by Job Type

Nonfarm Employment From Previous Year by Job Type

Hours and Wages

Average weekly hours of all private employees was unchanged at 34.5 hours. Average weekly hours of all private service-providing employees was unchanged at 33.4 hours.

Average hourly earnings of private workers rose $0.02 to $21.22. Average hourly earnings of private service-providing employees rose $0.02 to $21.02.

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation, not to be confused with "good" approximation.

The official unemployment rate is 5.0%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 9.9%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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