By Mortimer B. Zuckerman
“It was Mark Twain who popularized the comment attributed to Disraeli, to wit, that there are three kinds of lies: lies, damned lies, and statistics. So don’t be impressed by the fact that the most popular unemployment rate being bandied about dropped to 8.1 percent in April from 8.2 percent in March.
Progress? Not so. Paradoxically, the reason for the drop is negative, not positive. It is due solely to the fact that 342,000 discouraged workers who were seeking employment dropped out of the labor force and are no longer counted as unemployed. Without that withdrawal, the unemployment rate would have risen to 8.4 percent in April. In fact, if the labor force participation rate had remained where it was in June 2009, when the recession officially ended, the headline jobless rate would be north of 11 percent.
Every basis point decline in the unemployment rate, which peaked at 10 percent in October 2009, has been due to the drop in the labor force participation rate and not in the growth of real employment. A steady stream of men and women and young people got tired of looking for work that isn’t there.”