Unemployment Rate Hinges on More than Job Gains

Since the big news last week was that the unemployment rate has dropped again to 8.3%, everyone from Wall Street to the politicians have been celebrating. It is welcome news and shows us that the economical health of the United States is improving. In fact, the unemployment rate is the lowest it has been in three years. That is great news! But this news article states that the “unemployment rate hinges on more than just job gains”. Wait a minute. I thought since the unemployment rate went down that means we were gaining jobs every day. Doesn’t this mean that the people who lost jobs during the recession are getting their jobs back or getting new employment opportunities? Well this news article explains some things I did not know or understand fully. The article begins by telling us that “the unemployment rate can rise or fall even when no jobs are created or lost”. This is because the employment rate only counts the number of people who don’t have a job and are actively looking for work. But many people have quit looking for work so now the labor force participation rate is at record lows. According to the article, that is one reason why the unemployment rate is dropping. So if the economy keeps on improving those people may return to the labor force and therefore keep the unemployment rate high or even make it rise higher in the future. I would recommend this article to others so they would be more informed about the economic situation and unemployment rates in the U.S.


  http://www.usatoday.com/money/economy/employment/story/2012-02-03/behind-jobless-rate-data/52951342/1