Unemployment Rate Above 8% For 36th Consecutive Month, Labor Participation Rate Falls To 30 Year Low

There was a small reduction in the unemployment rate today, from 8.5% in December to 8.3% in January, and the media is championing the fact that this is the fifth month in which there’s been a decline.

The U.S. job market strengthened at the start of the year as employers added an unexpectedly large number of new jobs and the unemployment rate in January dropped for the fifth straight month to 8.3%–the lowest in nearly three years.

The Labor Department said Friday that employers nationwide added 243,000 net new jobs in January – about 100,000 more than what analysts were forecasting. Job gains were broad-based, powered by increases in manufacturing, professional and business services such as accounting and engineering, and in leisure and healthcare industries.

Superficially this all sounds very nice, but a closer look at the numbers shows us that this is statistical static. The real economic picture isn’t improving.

The economy may have added 243,000 new jobs, but some 1.2 million workers dropped out of the labor force (meaning they were no longer counted against the unemployment rate). According to Zero Hedge, that’s an unprecedented and record-setting one-month number for labor force shrinkage.

The labor participation rate is now at a 30-year low of 63.7% (click for a larger view):

The economy isn’t improving. The only reason the unemployment rate is going down is because people are giving up looking for jobs.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • Flamejob5

    Election-year math!

  • Dakotacyr

    Of course that would be your spin.  So funny. And you should be cheering the loss of public sector jobs.  Glad you continue to follow the rightie talking points.

    • http://sayanythingblog.com Rob

      It’s not spin.  It’s called analysis.  The unemployment rate is a poor measure.

      The labor participation rate is at a 30-year low, and you expect us to believe that things are improving?

    • http://flamemeister.com flamemeister

      How very stupid.

  • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

    More proof that President Obama and Democratic policies are helping America climb out of the bush/gop hole.

  • Dakotacyr

    And accuracy is not your strong suit:

    From the BLS report.:
    Among the marginally attached, there were 1.1 million discouraged workers in January, little different from a year earlier.

    So there were not 1.1 million NEW discouraged workers. 

    • http://sayanythingblog.com Rob

      Nice try.

      So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million.

      http://www.zerohedge.com/news/record-12-million-people-fall-out-labor-force-one-month-labor-force-participation-rate-tumbles- 

      • Dakotacyr

        OMG, you are quoting from a blog, I actually quoted from the BLS report.  Unbelievable!

        • http://sayanythingblog.com Rob

          You really don’t understand the terms and the numbers we’re talking about, do you?

          The blog I linked is getting its number from the BLS report.  There was a drop of 1.2 million in labor participation.  That is different from “discouraged workers.”

    • Hal712

      Once again, you are wrong.

      • http://flamemeister.com flamemeister

        Being wrong is Dakotacyr’s specialty.  Might be worthwhile to find out what stocks he doesn’t recommend.

      • Dakotacyr

        Sure if you believe a blog over the actual BLS report.  Too Funny!

        • http://sayanythingblog.com Rob

          Says the person who doesn’t know the difference between the labor participation number and discouraged workers.

          • Hal712

            He may not be so dumb as to not know the difference, he may be just dishonest.

          • http://sayanythingblog.com Rob

            There’s always that.

  • mickey_moussaoui

    In other words, we are treading water but getting much, much deeper in debit daily. Yeah, that’s comforting.

    We deserve better than this. Either lead or follow but get the hell out of the way.

    • http://sayanythingblog.com Rob

      It’s worse than treading water.  Things are getting worse

      • Hal712

        You are right on Rob.  If the official unemployment rate (still over 8%) is reduced by a reduction in workforce, not by an increase in jobs, things are getting worse. 

        The official unemployment rate is about as accurate as the official inflation rate.

  • WOOF

    Trending Up
    The US economy added a net 243k jobs in Jan, 257k of which was in the
    private sector and both are well above expectations of 140k and 160k
    respectively.

     Revisions to the two prior months were up by 60k ….508k people joined the
    labor force, a whopping 847k jobs were added in the household
    employment survey.

    Labor pool shrinkage.
    After yesterdays post on black markets , buy a clue and guess where the people who leave the labor pool go.
    Then add in baby boomer retirement.

  • WOOF

    Where have you been Hal? 
    It’s not about 1 month,
    Jobs have been increasing since 1/09

    • http://sayanythingblog.com Rob

      Those numbers aren’t indexed to population growth.

  • Hal712

    WOOF, you show your ignorance once again.  Private sector employment (the chart you posted) has not been strong enough to substantially reduce the unemployment rate.  There are more job losses and people dropping out of the workforce than job increases, that is not in dispute.  The discussion here was about labor force participation rate which has been falling.  If the labor force participation rate fell to zero percent, the unemployment rate would be zero percent too.  Econ 101, WOOF.  

  • WOOF

    Trend still is up.
    US auto sales rise 11 percent in January
    “• The average workweek for production and nonsupervisory employees on
    private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.

    • Average workweek for all employees was unchanged in January, but the
    manufacturing workweek increased by 0.3 hour to 40.9 hours (likely multi
    shift auto mfr); Factory overtime increased by 0.1 hour to 3.4 hours.

    • Average hourly earnings for all private employees rose by 4 cents
    (0.2%) to $23.29. Over the past 12 months, average hourly earnings have
    increased by 1.9%”
    http://www.ritholtz.com/blog/2012/02/taking-apart-the-january-2012-nfp-data/
     

    • Hal712

      OK.  Run on the state of the economy this election cycle, if it’s doing so well.  Three years of Obamanomics and the official unemployment is higher than it ever was under Bush.  GDP growth has been forecast downward to around 1% next near.  Only a Democrat would call that record a success.  Obama is a failure.

    • Hal712

      Look at your own chart and see the “summer of recovery” in 2010 that Biden touted and Obama economic policies killed.  How do you blame that on Bush?

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