Americans, don’t be fooled: Unemployment rate decline does not tell full story

Americans, don’t be fooled: Unemployment rate decline does not tell full story

In the last few months, many well-known American companies — including Caterpillar, Wal-Mart, General Electric, and Hewlett-Packard — have announced large jobs cuts. At the same time, Bloomberg News has reported that the number of full time jobs in the United States surpassed pre-recession levels. Amid conflicting headlines and an incredibly volatile world economy, just how strong is the United States’ job market?


Caterpillar’s announcement on job cuts came in late September. They will cut 5,000 American jobs over the next year and approximately 10,000 by the end of 2018. In the same month, Hewlett-Packard announced it would cut approximately 30,000 jobs. That is almost 10 percent of the computer company’s American work force.


These and other job cuts come amid a tough month for the employed in the United States. According to Fortune Magazine, employers have announced 493,431 layoffs so far in 2015. This amount has already surpassed the total amount of layoffs in all of 2014.



According to the Bureau of Labor Statistics (BLS), the unemployment rate in the U.S. is down to 5.1 percent, and the total number of unemployed Americans dropped by 1.5 million as of the end of August. These numbers look promising, but the BLS only includes members of the labor force in its unemployment rate calculation. The labor force participation rate measures the number of Americans over the age of 16 who are either employed or looking for work. The August report measured this rate to be just 62.6 percent with zero increase over the last three months. The employment population ratio, which measures the working age labor force over the total population, remained unchanged for the year at 59.4 percent.  


Employment statistics can be misleading, and the true picture of economic health is often much more complicated than the increase or decrease in one ratio. Although the unemployment rate is decreasing, participation in the labor force is not strong and wages are not increasing. This means that the demand in the job market is not as high as the unemployment rate would indicate.


What is the economic climate like in your area? Have you noticed a lift or a dip in the flow of cash within your community? Feel free to leave a comment or find me on Twitter @Andrew_Morse4

Andrew Morse

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