…if we have to drive the labor force participation rate down to zero. As I’m sure you know by now, the September jobs report this month saw the unemployment fall to 7.8% with 114,000 jobs added. How could the rate fall so much with so few jobs added? Because the labor force participation rate accounted for most of the decline.
Basically, the Department of Labor stops counting people as unemployed when they’ve given up looking for a job completely. Once that happens they’re no longer considered unemployed.
The Right Blogosphere is crying foul over the report, suggesting that the BLS is cooking the books. I don’t think they’re cooking the books so much as what they’re reporting has so little bearing on the world we actually experience that it’s pretty darned hard to relate the two.
However, that having been said, there are other reasons to be suspicious about the employment situation reports coming out of the Bureau of Labor Statistics. Chief among them are that it’s pretty obvious that the birth/death ratio, the fudge factor that the BLS uses to account for startups and businesses that close their doors, has been out of calibration for a very long time. We just don’t aren’t seeing the number of startups that we used to or that we should be.
BTW, anybody who says that the decline in LFPR is due to seniors retiring early is full of it. A lot of seniors can’t afford to retire. They’re staying at work much longer than they (but not I) anticipated.
Despite the decline in the headline unemployment rate this is a terrible, horrible, no good, very bad employment situation report.