'True' unemployment rate is double what gov't is telling us, economists say
Workers applaud Joe Biden's remarks on funding for passenger rail projects in the Northeast Corridor, Monday, Nov. 6, 2023, at the Amtrak Maintenance Facility in Bear, Delaware. (Official White House photo by Adam Schultz)
By Will Kessler
Daily Caller News Foundation
A large section of Americans left the workforce following the COVID-19 pandemic and have not returned, and if the workforce returned to its previous size, the unemployment rate would be nearly double, according to data from the Bureau of Labor Statistics analyzed by the Daily Caller News Foundation.
The official unemployment rate in December was 3.7%, accounting for around 6,268,000 Americans without jobs who were still looking for work, with 100,540,000 jobless people being counted as not in the labor force and therefore not being counted as unemployed despite not having a job, according to data from the BLS. In comparison, the number of people counted as not in the labor force in February 2020 was only 95 million, with around 5 million people permanently leaving the workforce following the COVID-19 pandemic, which, when added to those counted as unemployed, yields an unemployment rate of around 6.7%.
“These more accurate estimates of the true unemployment rate signal weakness in the overall economy and the labor market specifically,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation. “They are consistent with a mild recession. The number of people on disability has exploded for three years now with a spike of millions of people. That indicates a very large portion of these unemployed workers who are missing from the labor force have simply shifted from unemployment to welfare.”
The official unemployment rate has been historically low over the past few years, dropping below 4% during the Trump administration for the first time since 2000, according to the Federal Reserve Bank of St. Louis (FRED). The rate briefly spiked during the COVID-19 pandemic before descending back below 4% around the start of 2022.
Labor force participation has also taken a hit following the COVID-19 pandemic, with 63.3% of Americans employed or looking for employment in February 2020, compared to 62.5% of Americans in December 2023, according to FRED. Labor force participation has declined steadily from its peak in 2000 of over 67%, stabilizing and slightly rising during the Trump administration before the COVID-19 pandemic.
“If somebody leaves the workforce, then they are not considered unemployed,” Michael Faulkender, chief economist and senior adviser for the Center for American Prosperity, told the DCNF. “There were about 700,000 people last month, according to the survey they put out last Friday, that left the workforce. Yes, so to the extent that people are not working and they’re not looking for work, the unemployment rate doesn’t grab that.”
There were 167,451,000 Americans counted in the labor force in December, less than the 168,127,000 that were counted in November, according to the BLS. The difference equates to 676,000 fewer people in the workforce in the month.
The government also heavily overreported the number of jobs in 2023 in its monthly jobs reports, later revising the numbers down. In total, the number of jobs the country had in 2023 was 749,000 lower than what was initially given.
“The expansion of many welfare programs besides disability under the Biden administration means additional people can live off the dole instead of going back to work,” Antoni told the DCNF. “That expansion has been in terms of both who is eligible and also the gratuitousness of the benefits for which people are eligible.”
The BLS directed the DCNF to the methodology used to calculate the number of people not in the workforce, which includes “retired people, students, those taking care of children or other family members, and others who are neither working nor seeking work.”
This story originally was published by the Daily Caller News Foundation.
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