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Unemployment rate declines to 5.6%, but…

January 13th, 2015  |  David Stephanides

On January 9, the Bureau of Labor Statistics reported that total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent from 5.8 percent the previous month. Good news, if only the other side of the coin didn’t reflect such a stunningly different picture of the American workforce.

Besides an unexpected drop in hourly average pay, the latest statistics also indicated that a record 92.9 million are no longer in the labor force, as the labor participation rate pegged a 38-year low – 62.7 percent. Included in the number are  55.8 million women who did not have a job and did not actively seek one in the past four weeks – a 26-year low.

The Bureau’s “U-6″  statistic (total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force) indicated that unemployment in December was 11.2 percent, seasonally adjusted.

The Bureau publishes six levels of unemployment, but only the “U-3″ unemployment rate gets the headline. The U-3 rate does not count as unemployed the discouraged jobless who have not looked for work in the past four weeks because they believed no jobs were actually available. Further, since 1994, long-term discouraged workers, those who have been discouraged for more than 12 months, have been excluded from all government data.

One could argue, then, that the headline unemployment rate, the U-3 rate, has stayed relatively low because it excludes all discouraged workers. Gauging the headlines with each new unemployment report, it’s clear that may news outlets are taking a deeper dive into “the numbers.” A brief look under the covers typically reveals surprising details not conveyed in the headlines.