Has Unemployment Really Dropped?

Over the last few years, the media has been reporting falling unemployment.  It's now thought to be as low as 5.4%.  But is that the whole picture?

When the government measures unemployment, they only take into account people capable of working who are currently not employed AND currently searching for a job.  So, when someone quits their job search, they're no longer considered “unemployed.”

When we look at the number of Americans participating in the work force, the picture is not so rosy.  While unemployment has dropped, so has work force participation.

Read this article to learn more.

Since the end of the last recession, in June 2009, the unemployment rate has appeared to drop from 9.5 percent to 5.4 percent. But the entire drop came from declining labor force participation. None came from the faster-than-population-growth job growth that is expected and required of an economic recovery.

Between 2009 and 2015, the number of Americans participating in the labor force dropped from 65.7 percent to 62.8 percent. This represents the statistical disappearance of seven million potential workers, who have given up looking for work or chosen to retire. If the June 2009 participation rate of 65.7 percent were used today —  if those seven million missing workers were counted among the unemployed rather than ignored entirely — the unemployment rate today would be 9.6 percent.

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