Is Unemplyoment Really Improving? | Smart Unemployment

Is Unemplyoment Really Improving?

    “The unemployment rate fell to 8.6% … This is the lowest rate in two years.”

If you take look at the unemployment statistics reported by Washington, you might think that the economy is turning around.

We decided to dig into these figures and see what they are really saying.

The results may surprise you …

The Unemployment Rate – Simple Math

Let’s take a quick look at how the unemployment rate is calculated:

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Unemployment Rate = Unemployed Workers / Total Workers

Here’s an example: Let’s assume you have a country with 1000 people:

  • Total Workers = 600 (the other 400 people are children, students, retired, or unable to work).
  • Unemployed Workers = 60
  • Unemployment Rate = 60 / 600 = 10%

If 5 jobs are added, the number of unemployed workers drops to 55, and the unemployment rate falls to 9.2% (55 / 600).

8.6% — You Must Be Kidding!

Here in the United States, there is a little trick to the unemplyoment rate calculation. The rate can fall because new jobs were added (like in our example above), or because the number of Total Workers falls.

Continuing with the our example, let see what happens when the number of Total Workers falls:

  • Total Workers = 590
  • Unemployed Workers = 50
  • Unemployment Rate = 50 / 590 = 8.5%

As you can see, when 10 Unemployed Workers “decide to leave the work force” the unemployment rate suddenly improves.

Did You “Leave The Workforce”?

What the government statistics show is that the workforce got smaller. They say that this is because people retired, or “gave up looking for work”. As a result, the unemployment rate appears lower, which suggesting that the economy improved.

The Bottom Line

The good news is that there were approximately 120,000 jobs created last month. This is real progress.

The Unemployment Rate, fell, in part, due to an increase in the number of Americans who “decided to leave the workforce”.


What are your thoughts on these government statistics? Feel free to leave a comment below.


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20 comments to Is Unemplyoment Really Improving?

  • 22isenough

    I have sinned: I took a bite out of a Dunkin Donut – bad, bad, BAD

  • 22isenough

    American can thrive without eating Dunkin Donuts!!!
    Don’t feed crappy sugary Dunkin Donuts to kids.
    Shame upon you eating Dunkin Donuts!!!
    The society has to put regulations from companies selling sugary stuff with no regards to people’s health.
    Eat Dunkin Donuts, and you will get diabetes!!!
    Bad, bad, bad, Dunkin Donuts!!!
    It’s a garbage food with all sorts of icing on it.
    The services are crappy at DD.
    Drive DD out from your community!!!
    American can live w/o DD.

  • 22isenough

    I google to find how economy has improved or is improving. How often can I google it, once a week, once every six months, once a year, or one every five years? It looks like once every five is good given the severity of the economic depression and no sign of improvements have been so far.

  • 22isenough

    Blues that gets bounced back is recession, blues that don’t get bounced with thick dark cloud looming over head is called depression. People play with words; the financial meltdown occurred in 2007, that triggered collapse of economy is hardball DEPRESSION, not a great recession. The magnitude of depression is nothing compared with depression.

  • 22isenough

    Crony capitalism is the culprit, that led millions of 99ers to lose their houses and jobs.

  • It sounds like you will be generating problems yourself by seeking to solve this issue rather than seeking at why their is usually a issue during the Very first place. thanks !!! extremely really helpful post!

  • 22isenough

    Is Unemployment Really Improving?


  • Yardape

    When looking for work there where 50 people for every job I applied for this was the most dischaging thing I have ever had do in my life. It took me a year to find a job it is just part-time and it was not in my field. At age 55 it was a nightmare that I will never forget. Got laid off 3 jobs in the last 3 1/2 year then it took me a year to find this job before that haa job for 25 years. Applied for everything heavy lift is out and I knew I could not do it. I stand on my feet 8 hours a day and lift things all day long. I am happy to have a job. It took me a year to find a job. There are little it any jobs out there. This is the only goverment program I have ever been on Unemployment.

  • USANaturalized

    Greetings and a Happy New Year to All with Hopefully New Successes for many.

    I have read the above and wonder how many temporary workers are manipulated by the system? Let me elaborate,
    1)How many companies are listing that they have jobs available, just to help the government keeping the unemployment figures low? The companies in turn take the information from potential employees to readjust their own salary/hourly compensations. Do those companies who advertise positions receive government incentives for advertising that they MAY hire someone?
    2)At what stage of unemployment does the government stop counting you as a potential worker or worker that decided to drop out of the workforce, is that a sliding bar to accommodate the governments calculations?
    3)If you were making over 100,000 per year, you loose that job, and you are lucky to find 2 jobs that paying 20,000 a year each (one position temporary the other full time with layoff at end of year because company did not follow projections), are you counted as 1 worker or 2 because you filled 2 positions trying to keep a roof over your head?
    4) I have applied for jobs in multiple states (have traveled on my own dime from state to state) and have applied for positions where I was fully qualified for with no takers, I am capable and willing (drove a taxicab (1 day logged $3.50/hour for 12 hours)), I am educated and have lost almost everything I had, I am an computer engineer, have done entrepreneurial work, worked my way into the executive management arena and have had a successful past. Now, my attitude is relearn, and restart from scratch at an age of 51 competing with college grads that are unable to find work, is that fair… All my knowledge that I have gained is for the birds? (Sorry for the venting).
    5) So, going back to the original question before I digressed, What happens to movers and shakers that fall through the cracks of the system (the ones like myself who made a couple of strategic moves and lost in the process), I am certain that we are not being counted by the system as being willing to work or being part of the workforce. Where do (we/I) find the legal jargon on the actual process of how unemployment rates is counted?
    6) People who have been given golden handshakes to leave their companies for early retirement, are they being counted?

    I have ideas on how to improve this economy and really put people to work again, it will take willpower and utilization of common sense (which in my opinion has been lost by the general public (Sorry if it applies to you!!)). We, the country of opportunity, can turn this around… Look at the value of the dollar… If it was not for our printing presses (to make more money) and the help of the Chinese, I do not want to guess where our country would be right now. In my opinion, we are a deck of cards built on a faulty foundation and my question is “When is the earthquake going to hit”, I guess that is food for thought….

    I am looking to hear comments

    Wishing us a good recovery for the new year

    • The King

      After reading your post it’s clear why you are unemployed.

    • 22isenough

      There have been two New Years since your last New Year’s Wishes in your post and one coming in about half a year. How time flies and how the recovery is so slow like a sloth climbing up on a tree. We have seen more chaotic scenes around the globe having to do with financial troubles with a long lapse of silence hearing no subsequent good news of recovery to follow. Japan is still suffering 15 years of continuing deflation and the U.S. unemployment rate is deplorable following the pattern of Japan’s lost two decades since their housing bubbles burst occurred in 1989. Many people in the U.S. are suffering deflation of their assets and value of their experiences and education to record high to the point of making some Ivy League graduate do lawn mowing to make his meager living. All the jobs that have been lost still not returned, and the government and local officials are increasing more taciturn in discussing long term unemployed to the point that no such word is expressed or tabooed to mention.

  • Anonymous

    Among those people who have given up looking for work, are they leaving because they are willingly leaving or prospects of finding jobs seem dismal? Why we play with numbers trying to distort the reality? The reality is that people are giving up searching for work because they don’t want to be slapped with rejections or echoed back with no answers. We can’t improve the economy brushing things under the rugs; the government should intervene and perform major surgery. The country is polarized with those who “have” and those who “don’t.” This sounds awefully similar how communision evoved as antithesis to explitation of works by capitalists to gain more benefits at the sacrifices of poor. Would history repeats itself?

    • The King

      You wanted change….you got it. This is the new liberal democrat economy. This is the change you can believe in.

      • 22isenough

        New democrat economy is to save the wall street rather than the main street. The new democrat economy saved the auto and bank industries; it’s a hallmark of crony capitalism.

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