Don’t be fooled by low unemployment figures

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Last Friday, the jobs data revealed that 261,000 additional jobs had been created in October and that the unemployment rate had fallen to a new low of just 4.1 percent. President Trump reveled in the news by tweeting: “Unemployment is down to 4.1 percent, lowest in 17 years. 1.5 million new jobs created since I took office.”

A phony jobs report

However, the unemployment rate is a heavily flawed measure that masks a much weaker labor market. The unemployment rate only counts those who are actively seeking employment, missing out the millions of American’s who are not seeking work altogether.

{mosads}What’s more, the decline in unemployment reported in October is largely the result of 968,000 workers exiting the labor force last month. With 95.5 million Americans no longer in the labor force, the labor force participation rate fell back to a four-decade low of 62.7 percent.


After four decades of women entering the labor force, female labor force participation has remained relatively unchanged for 30 years at around 56-57 percent. However, male labor force participation has been on a downward trend since at least the 1950s; from close to 90 percent in the early 1950s to less than 69 percent today.

It would, nonetheless, be absurd and economically baseless to label 31 percent of men, or 37 percent of the civilian population as unemployed. These figures include full-time students (15+), retired senior citizens and disabled adults who cannot physically work.

Long-term labor force decline among prime working-age men

To get a clearer picture of the state of the U.S. labor market, we must analyze the labor force participation rate of men who are of prime working age, those aged 25-54. This demographic group is highly unlikely to either be in full-time education or in retirement.

The official unemployment rate among this demographic group stands at just 3.1 percent as of October. However, the uncounted — those not in the labor force and not looking for work — currently represent 11.5 percent of this demographic group. So the unemployment rate among prime working age men, including those not actively looking work is actually 14.6 percent.

The “official unemployment rate” has remained fairly stable among this group, with small fluctuations during times of recession. In contrast, the “uncounted unemployment” rate among prime-age men has been on a steady upward trajectory since the late 1950s, accelerating in the late 1960s and passing the 10-percent mark as recently as 2008.

As recently as 2014, it was reported that of prime-age men not in the labor force, around one-third are accounted for by early retirees, men taking care of relatives or those enrolled in school or training. More strikingly, most men in this demographic group reported being inactive due to a disability; this rate has hovered between 56 and 65 percent of prime-age men over the past two decades.

Among prime age men not in the labor force, around 70 percent want a job, while around 30 percent do not want a job or are not certain about their desire to work, according to historical survey data from the Current Population Survey.

What this trend means about the state of the labor market

Today the number of men not in the labor force overshadow the dwindling number of unemployed men. In fact, uncounted unemployed men now outnumber official unemployed men who are actively looking for work by a ratio of almost 4:1.

The rise of the uncounted workless man underscores the misleading nature of our first-line metric of the labor markets condition: the unemployment rate. However, this metric for measuring labor market health was conceived at a time when a mass exodus of prime-age men from the labor force was simply incomprehensible.

Rather than reveling in last week’s positive unemployment figures, the focus should be turned instead to reversing the long-term decline in labor force participation, particularly among the 7-8 million working-age men, most of whom have no interest in working at all.

Jack Salmon is a Washington, D.C.-based researcher focused on federal fiscal policy. Salmon holds an M.A. in political economy with specializations in macroeconomics and comparative economic analysis from King’s College London. 

Tags Causes of unemployment in the United States Current Population Survey economy Employment-to-population ratio Male unemployment Unemployment Unemployment in the United States

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