The headline: unemployment rate drops to 6.3%
Boom times in America, right?
Here’s what has me scratching my head …
Let’s work through some arithmetic.
According to the BLS, the civilian labor force dropped by 806,000 in April … to about 147.5 million.
Of the 147.5, about 9.3 million were reported as unemployed … 9.3 divided by 147.5 equals 6.3%
Let’s pretend that the 806K drop-outs were still being counted in the labor force ….
The labor force number gets bumped to 148.3 million … and the number of unemployed goes to 10.1 million.
The unemployment rate?
Well, it goes to 10.1 divided by 148.3 … or 6.8% … a 1/10th increase versus March … not a 4/10ths drop.
BTW: Heard an interesting explanation for the steep decline in the labor force number.
In order to get unemployment benefits, claimants must say that they’re looking for work … so, they get counted in the labor force — whether they’re looking or not.
When their UE benefits expire, they can be more honest and admit that they’ve been liberated from work and aren’t really looking … so, they don’t get counted in the labor force number.
Makes sense to me.