The economy added 243,000 jobs in January, according to the Bureau of Labor Statistics. That’s 108,000 more than the forecast of 135,000. As a result, the unemployment rate fell from 8.5 percent to 8.3 percent, the lowest level since February 2009. For the last three months, job creation has averaged 201,000 a month, a sign that a labor market recovery may be truly underway. Unemployment fell equally for both men and women, and private employers hired 257,000 more people. The service sector alone added 176,000 jobs. Unfortunately, this growth comes despite, not because of, the “stimulus” policies Congress has enacted. The two-month payroll tax cut extension didn’t create employment, for example, because employers see the tax change as temporary.
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The labor force participation rate shows no sign of improving. Revisions to the population estimates show that only 63.7 percent of adult Americans are active in the labor force (either employed or looking for a job). This is the lowest since 1983, a time when far fewer women worked.
This is a worrying trend. Demographic factors caused labor force participation to peak in 2000 and gradually decline—as the baby boomers aged and started to retire, their labor force participation fell. Since the recession began, however, participation rates plunged by 2.3 percentage points—a drop that demographic factors do not explain. |
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This phenomenon, Hederman and Sherk go on to explain, reduces the measured unemployment rate because individuals who aren’t looking for work aren’t counted as unemployed.
Lee ADDS: With this information I see a true unemployment rate of 27.3 %! This is reason for alarm! |
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