Jan. 9 (Bloomberg) — An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said.
Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.
The decrease in the labor force is a result of workers opting out of the unemployment system; frustrated with what is viewed as a poor labor market, individuals are giving up their search to find work.
“The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.(emphasis mine)
About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.
December’s 10 percent unemployment rate matched the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier.
The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — rose to 17.3 percent in December from 17.2 percent.(emphasis mine)
The underemployment rate is a statistic our elected officials do not want to talk about because it vividly shows the bleak underbelly of the financial problems in the country. Businesses are not expanding, in fact they are contracting because of the uncertainty surrounding legislation in Washington. What business owner would expand their employee base when the horizon points to increased tax burden on their business, such as the payroll health care tax? Business owners also know, the piper must be paid for the fiscal irresponsibility in Washington and Democrats, who currently control the Congress, always place businesses in the cross-hairs when looking to tax.
The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994.
Yes, the American people are discouraged. Is it any wonder that only 32% of eligible voters feel confident that Congress represents their best interest?