Carr: Unemployment Only Fell as Thousands Quit Job Hunt

Friday, 05 Aug 2011 09:46 AM
By Michael Carr

In July, the U.S. economy put 117,000 people to work. At the same time, 193,000 voluntarily left the labor force. If there weren’t so many people deciding not to find a job, the unemployment rate would have gone up.

Many factors go into the calculation of the unemployment rate. Two of the most important are the number of people without jobs and the number of people looking for jobs.

According to Bloomberg, job growth of about 125,000 a month is required to meet the demand of new entrants in the job market.


(Getty Images photo)
As the population grows, recent graduates, new immigrants, and many teenagers enter the job market each month and this total is about 125,000 greater than those leaving the job market because of retirement or other life changes.

In July, for unexplained reasons, 193,000 more people left the labor force than entered. This has been an ongoing trend over the past few years as tough economic times have led many to seek a life of leisure outside the work force.

According to the Bureau of Labor Statistics (BLS), only 58.1 percent of adults in America are working. This is the lowest level since the summer of 1983, when unemployment topped 10 percent.

Other countries aren't reporting the large drop in job seekers. This is unique to the U.S. job market, and perhaps is little more than wishful thinking of economists in the BLS.

Without so many people deciding not to work, unemployment would be higher and would have topped 10 percent.

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