Last week’s unemployment numbers revealed the dire straits facing the U.S. economy after it was revealed that almost 89 million Americans are not in the workforce, a record high.
While many have noted the drop in the unemployment rate from 8.3 to 8.1 percent, the number does not translate to more Americans working.
The unemployment numbers only reflects those Americans who are collecting unemployment benefits and looking for work. Once the benefits are exhausted, an individual is no longer counted.
By contrast, the Labor Department counts a person as not being in the labor force if they are at least 16 years old, not in the military or an institution such as a mental hospital, prison or nursing home and if they have not actively looked for a job in the last four weeks. However, if a person meets all of the above criteria but has looked for a job in the past four weeks they are considered to be “in the civilian labor force.”
In August the numbers in the labor force dropped to 154,645,000. Compared to July’s numbers of 155,013,000 this means that 368,000 people simply stopped looking for work. This number caused the unemployment rate to drop from 8.3 to 8.1 percent.
Additionally there were 113,000 fewer Americans employed than in July. The Bureau of Labor Statistics reported that August’s labor participation rate dropped to a 30 year low of 63.5 percent.
Alan Krueger, chairman for the White House Council of Economic Advisors wrote in the White House Blog said “it is important not to read too much into any one monthly report.”
Krueger also said it is “critical” that America continue Obama’s economic policies to put Americans back to work.
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