Exactly a month ago I wrote about the bogus employment numbers claimed for the Chicago area. I claimed that there were no actual jobs “created” and that the only reason the employment rate went down was because people simply left the job market.
Didn’t have this at the time… but my theory has real support.
Changes in population and the participation rate can significantly impact the unemployment rate. If the Civilian noninstitutional population (over 16 years old) grows by about 2 million per year – and the participation rate stays flat – the economy will need to add about 94 thousand jobs per month to keep the unemployment rate steady at 8.2%.
However if the population grows faster (say 2.5 million per year), and/or the participation rate rises, it could take significantly more jobs per month to hold the unemployment rate steady. As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 63.8%) over the next two years, the economy will need to add 227 thousand jobs per month to hold the unemployment rate steady.
via Calculated Risk.
Wanna see a chart of the Labor Force Participation Rate?
US Labor Force Participation Rate data by YCharts
Pretty wild? That fall off represents millions and millions of people who are simply no longer working, looking for work, claiming unemployment benefits, or are new grads who can’t find work.
It’s no wonder that more and more people are eating at McDonald’s.