Sort by

The Most Bogus Unemployment Number: Discouraged Workers

David Callahan

It's no secret that the employment data released monthly by the Bureau of Labor Statistics is basically a joke because BLS wildly undercounts the number of people who have given up looking for work or otherwise faded from the full-time labor force. 

Indeed, BLS sort of acknowledges this by always publishing additional numbers which are "alternative measures of labor underutilization," including the U-6 rate I've written about here in the past. The U-6 rate is "total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force."

Last month, the U-6 unemployment rate stood at 13.7 percent. 

But things are even worse than the U-6 rate suggests, because the biggest bogus number in the BLS's data can be found in its tally of "discouraged workers." According to BLS: "Discouraged workers are persons not currently looking for work because they believe no jobs are available for them."

According to BLS, there were 866,000 discouraged workers last month. 

The reason this number is so patently absurd is because there are 100 million adult Americans who are not in the labor force -- not including those officially unemployed. Are we really supposed to believe that only 866,000 of these 100 million are on the sidelines because they have given up hope? 

Does anyone at BLS really believe that? 

There are almost certainly millions of discouraged workers, including a great many older people pushed out of the labor force into involuntary early retirement. But the government chooses not to effectively track this group. If it did, the real unemployment number would be even higher than the U-6 rate.