In the financial press and the rest of the mainstream media, we are constantly inundated with the great “recovery” of America. While such calls have started to fade in recent months (it’s finally becoming cool to be the kid who points out that our politicians aren’t wearing any clothes), we still hear things like “THE LOWEST UNEMPLOYMENT SINCE THE 2008 CRISIS“.
At face value, unemployment has fallen significantly. However, there are lies, great lies… and then there are statistics; you see, a person can be unemployed only if he is still looking for work, and only if he has been searching for a short period of time ( search for too long, and you become “long-term unemployed”).
If he has given up on looking, or has been searching for too long, he is no longer counted as unemployed … and unemployment rate goes down. (Economists can’t tell if if you’ve given up, or if you’re on a vacation. They always assume you’re on vacation. If been looking for too long, on the other hand, it’s because you were too darned picky, not because there are no jobs. Therefore, if you’ve looked too long, you’re really just looking for an excuse to laze around. You bum you.)
I’ve explained participation rates before, but it bears repetition because the mainstream press only picks this factoid up when readers like you start calling them out.
Why has unemployment fallen to almost pre-crisis levels? Well, that tends to happen when yet another 579,000 Americans give up looking for work (or simply stop being counted) in the span of a month (for the month of September) .
More than ONE THIRD of all working-age Americans have given up on finding work or are “long term unemployed”.
94 MILLION working-age Americans have fallen out of the labor force, the lowest participation rate since 1977- a period of time where women were far more likely to have been housewives than workers. Those days, a single income was sufficient to support a family. Today, people who cannot find work are certainly not going to be able to survive on their own – it takes a dual income to barely scrape by.
According to Zero Hedge, Since Dec 2007, 14.9 MILLION Americans have fallen through the cracks, while only 4 million jobs were created.
Either Americans are retiring en masse, or this here is part of the reason why the wealth gap is widening every single year.
Absurdly, because they can’t fudge the participation stats, the mainstream media would have you believe that you’re all really just retiring. CNS News: “The number of Americans not in the labor force has continued to rise, partly because of retiring baby-boomers and fewer workers entering the workforce.”
Zero Hedge brought up an interesting relationship, which any economics grad would have heard of in his very first lesson: the law of supply and demand.
Indeed, the chart above explains that relationship extremely well.
(The civilian employment to population ratio is a very rough proxy for the participation rate.)
As fewer jobs are available, more people must compete over them. This competition leads to lower wages. Those who cannot find work after desperately searching for months eventually give up, or get counted as having given up because they’ve been searching for too long, causing participation rates to also fall.
Wages would have been unaffected if this were a simple case of people retiring; don’t forget that those who have “given up” would gladly take a paying job if it were available. It is their competition with the “lucky” job-holders that keeps salaries down.
You can see for yourself that the two charts show a high degree of correlation; the wage trend nearly mirrors the the participation-rate-proxy trend. Both have fallen drastically since 2007.
So basically, no, people have not retired in droves, because they are still competing for jobs. Even if economists and politicians want you to believe that you’re really retired.
Sources: ZeroHedge
This Article (Participation Rate At FOUR DECADE Lows, 580,000 Americans Give Up In A MONTH) is free and open source. You have permission to republish this article under a Creative Commons license with attribution to the author(CoNN) and AnonHQ.com.
As a long term unemployed, now retired, individual I can say that dozens of the people I know are retired. In some places there large groups of people that have retired and not that many unemployed or have given up. I find it hard to believe that 1/3 of the working population is not working. The largest group of unemployed are those that have criminal records. Most of the criminal records are for bullshit charges. But 1/3 of the population who have given up or retired is not possible. I am not buying it.