Unemployment Rate Decline Obscures Reality of the Market

I would be the first to congratulate President Obama if the unemployment rate were declining based on an improving economy. Therefore, one might call me hypocritical upon hearing that I am not in the least excited about the recent 7.8% unemployment number.

For those who have better things to do with their spare time than look at Labor Department charts, that number is significant because it represented the first reading below the 8% barrier since before Mr. Obama took office. This news was of course welcomed by the Obama campaign, and buoyed a week otherwise marked by a widely-panned debate performance which could yet have sunk his heretofore immaculately-run campaign.

In contrast, and as noted above, I do not embrace this number with such welcoming arms. To me, the headline unemployment number has become nothing more than an obfuscation, a classic case of window dressing, with far too political an approach to calculation.

The unemployment number most Americans see does not account for the underemployed, those who have taken a part-time job below their experience or education. More importantly, it ignores frustrated workers, those who have just plain given up on finding a job and have resorting to receiving government benefits or severance or whatever savings they might have rather than continue with a fruitless job search. Adjusting for those critical yet under-discussed variables, the rate of Americans out of work and underemployed is in the mid-teens.

While President Obama is not responsible for how unemployment is reported, and both parties have taken advantage of the way the headline number is produced, there should be no great celebration, hand shaking or back slapping over 7.8. The reality is that far too many Americans are not as productive as they could be in this economy, too many Americans still feel the pain of poor policies, and no amount of obfuscation can change that.

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