John Ransom

Although there’s little doubt that job creation is speeding up in the private sector, unemployment is not going down as widely touted by the Bureau of Labor Statistics (BLS). In fact, it’s likely unchanged since the beginning of the recession because the government is deliberately undercounting the workforce to make unemployment appear to go down. 

Missing in the latest labor report are at least 1.2 million job seekers who have been added to the civilian population over the last year but not to the work force, thereby artificially deflating the unemployment rate.

Chart by Zero Hedge:

BLS is undercounting the workforce by lowering the Labor Force Participations rates 

They are missing in part because the BLS no longer counts people who have been unemployed for so long that they have stopped looking for work. Since 1994 the BLS has discontinued the practice of counting the “long-term discouraged workers” from the workforce. If a worker stops looking for work after a period of time, they are no longer counted in the workforce. That means that government has created a system whereby the longer a jobs recession continues, the less reliable the unemployment numbers become- to the advantage of the government. 

In December of 2010 there were just shy of 239 million workers in the civilian pool available to the work force. In the last year, that number has risen by 1.6 million to 240.5 million people. At the same time, the officially-counted workforce as used by the BLS has risen by only 274,000 workers. At a participation rate of 64 percent, that number should be closer to 1.1 million workers. Indeed, over the last year, the participation rate has also dropped from 64.3 percent to 64 percent.  In other words, fewer people from the available population are counted as available to the workforce, thereby decreasing unemployment numbers.

In making an apples-to-apples comparison with a year ago, the country should have about 1.2 million more workers in the workforce than the BLS currently calculates. If one accounts for those extra workers, top line unemployment is at 9 percent. But that’s not the end of the deception. 


John Ransom

John Ransom is the Finance Editor for Townhall Finance.