Data released today shows that 203,000 new jobs were created in the United States in November and that the unemployment rate fell to 7%, it's lowest level in five years.
Here is a graph of civilian employment in the U.S. over the last year, indeed showing a jump in net new jobs.
And here is the graph showing the unemployment rate. It did indeed decrease over the past year.
But this information tells only part of the story. Unemployment is measured by dividing the number of people unemployed by the number of employed plus the number of unemployed people. (Unemployed are people who actively sought work but have been unable to find a job. See this for more information.)
Suppose our economy consisted of 300 people. One hundred were either younger than 16 years of age, in the military, or institutionalized in a prison or retirement home or home for the disabled. They are not included as able for work, therefore they are not included in our employment and unemployment stats.
Another hundred of the three hundred citizens of our country were retired at home, stayed at home to take care of kids, full-time students not looking for work, or others who were neither working nor looking for work. These people are considered not in the labor force. They do not show up in our unemployment stat.
Lastly, let's say that of the remaining one hundred people, 7 wanted to work but could not find a job, while the other 93 were working at least part-time. We take the 7 (unemployed) and divide it by 100 (i.e., 93+7=100) to calculate the 7% unemployment rate.
But suppose there were actually only 80 people who had been considered as not in the labor force last month, and 120 were either working or looking for work. Of these one hundred and twenty, suppose 15 were unemployed and 105 were working at least part-time. The unemployment rate would be 12.5%. Discouraged by not finding a job, suppose 10 of these 15 left the labor force by deciding to no longer even look for a job. Now the labor force is 110, of which 5 are currently unemployed. The unemployment rate is now just 4.5%, but are we better off?
So now let's look at some other charts.
First is the labor force participation rate.
This did increase over the last month, but only by two-tenths of a percentage point. Nothing to write home about, especially since it is still down by six-tenths of a percentage point from last year, and a full three percentage points from before the most recent recession.
Most importantly is the employment population ratio. This is a measure of the number employed divided by the total civilian population age 16 and over who are not institutionalized. (i.e., This would be the 200 from the example above. Dividing the 93 who are currently employed by the 200 who are considered employable, and you get an employment population ratio of 46.5%.)
Here we see an ever-so-slight increase over the past month, from 58.3% to 58.6%, but still down by one-tenth of a percentage point since last November.
Worst yet, it is not showing any recovery from the recession. This is not all that rosy of a jobs report.