Unemployment Data

The BLS released its December employment report today. 

"In December, both the number of unemployed persons, at 15.3 million, and the unemployment rate, at 10.0 percent, were unchanged."

I've previously discussed why the unemployment rate itself is kinda silly, but the "number of unemployed persons" is an even more irrelevant number - here's why.  Looking at Table A from the BLS release, you can see that the number of "unemployed" people actually decreased by 73k.  Of course, the survey only counts people as unemployed it they remain a part of the labor force, when they are still looking for a job.  If you are unemployed but you give up your job search, VOILA - the number of unemployed people goes down!  Problem solved !! ????

|                 |                          |         
                         |    Quarterly    |                          |         
                         |     averages    |       Monthly data       |  Nov.-  
        Category         |_________________|__________________________|  Dec.   
                         |        |        |        |        |        | change  
                         |  III   |   IV   |  Oct.  |  Nov.  |  Dec.  |         
                         |  2009  |  2009  |  2009  |  2009  |  2009  |         
_________________________|________|________|________|________|________|________ 
                         |                                                      
     HOUSEHOLD DATA      |                 Labor force status                   
                         |_____________________________________________________ 
                         |        |        |        |        |        |         
Civilian labor force ....| 154,235| 153,544| 153,854| 153,720| 153,059|    -661 
  Employment ............| 139,339| 138,138| 138,242| 138,381| 137,792|    -589 
  Unemployment ..........|  14,895|  15,406|  15,612|  15,340|  15,267|     -73 
Not in labor force ......|  81,858|  83,195|  82,696|  83,022|  83,865|     843 
                         |________|________|________|________|________|________ 

So, we can see in Table A that the size of the Civilian Labor Force decreased by 661,000, and that the number of employed persons decreased by 589,000.  I would propose to you that it's probably a much better indication of the health of the economy to look at the trend in employment, which is an actual number, instead of the trend in "unemployment,"  which is a bastardized number.

We can get a further look at the real trend by looking at the employment/population ratio, as well as the labor force participation rate.  Unfortunately, both continue to trend lower (I clipped only the Not Seasonally Adjusted data in the interest of space)

Not Seasonally adjusted                   
                                                                                                                                        
        Employment status, sex, and age                                                                                                 
                                                                                                                                        
                                                  Dec.      Nov.      Dec.      
                                                  2008      2009      2009       
                                                                                                                                        
                     TOTAL                                                                                                              
                                                                                                                                        
 Civilian noninstitutional population.........  235,035   236,743   236,924    
   Civilian labor force.......................  154,349   153,539   152,693    
         Participation rate...................     65.7      64.9      64.4       
     Employed.................................  143,350   139,132   137,953    
         Employment-population ratio..........     61.0      58.8      58.2       
     Unemployed...............................   10,999    14,407    14,740     
         Unemployment rate....................      7.1       9.4       9.7        
   Not in labor force.........................   80,686    83,204    84,231     
     Persons who currently want a job.........    5,180     5,618     5,939      

In plain English, a smaller percentage of the population is employed. 

update: See Calculated Risk for pretty graphs on the subject. 

-KD