Why the unemployment rate is a meaningless statistic

Last week, the Labor Department reported that the April unemployment rate was 5.4%, which was down slightly from March’s 5.5%. If this were true, it would be wonderful. But it isn’t true. That isn’t anywhere close to actual unemployment rate. You see, the 5.4% figure does not include those who aren’t in the labor force. There are a whopping 93,194,000 Americans who are not considered part of the labor force. This results in a participation rate of just 69.45%, which is the lowest percentage since 1977. So the federal government is able to put forth what appears to be a favorable unemployment figure by using an ever-shrinking labor force, while the real number of Americans who are out of work continues to swell. Indeed, a more accurate measure of the real unemployment rate is known as “U-6,” which considers those “marginally attached” to the labor force. The April U-6 number is 10.8%, exactly twice the reported unemployment rate.

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