On January 9, 2016, President Barack Obama went live to talk directly to the people in his weekly address. This time around, President Obama touted American progress, stating how “he has brought America back” over the past year. The accomplishments he listed include reaching a nuclear deal with Iran, relaunching diplomatic relations with Cuba, and the remarkable progress made in the American auto industry. The one detail that gained much attention among viewers was his quoted unemployment rate. According to President Obama, unemployment has fallen to 5 percent. The low rate, coupled with renewed confidence in the economy, has led to the Federal Reserve to start raising interest rates.
On the subject of unemployment, it could be quite an accomplishment. Given that the United States estimated population is about 318.9 million, that means a little under 16 million people are considered unemployed. No wonder President Barack Obama would tout 5 percent unemployment as an accomplishment. The question is, though, if that number is as good as Obama makes it out to be.
According to Huffington Post, the U.S. Department of Labor reports the unemployment rate stayed steady at 5 percent for a third straight month. That fact, along with the rest of the U.S. Government’s positive news pertaining to the economy, which includes employers adding a combined 50,000 more jobs in October and November and hiring an average of 284,000 a month in the fourth quarter, surely stroked the hopes of the American people.
Unfortunately, there is a minute detail about the unemployment rate that was not mentioned during President Barack Obama’s speech about the economy. According to the U.S. Department of Labor, there are certain requirements one must meet to be included in the population percentage of unemployment.
“People are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.”
With the aforementioned statement, one must ask how many people are no longer unemployed because they found employment compared to the number who no longer meet the requirements to be recognized as unemployed, which is known as “labor force participation.”
Economists have analyzed the data and found that labor force participation has steadily dropped since 1998. Some of the drop has to do with Baby Boomers retiring, but the numbers do not equate to the entire drop itself. In fact, most of the drop is because unemployed people have simply given up on trying to find a job.
Anyone unable to find a job might sound ludicrous given that Barack Obama says 284,000 people were hired per month in the fourth quarter of 2015. Yet, being hired is a very broad term on its own, as proven in a debilitating report by Newsmax. How many of those hired were to permanent jobs compared to temporary jobs? How many of those hired were to full-time jobs compared to part-time jobs? Also, how many were laid off or fired in contrast to the 284,000 hirings?
Comparing this analysis to what President Obama has mentioned in his address, it is clear there are two very different pictures being painted for the nation’s citizens.
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