Employment Drops, Only Because People Gave Up Looking For Work

Posted: Jul 02, 2010 9:57 AM
Rather than looking at the unemployment rate this month, we might as well look at the number of people who simply threw in the towel when it came to actually looking for a job. There were 33,000 jobs added to the marketplace, but over 650,000 people simply stopped looking for work — meaning the unemployment rate dropped because those workers aren't counted as actually unemployed. They're simply destitute, and resigned to being that way.

So when you look at the 9.5% unemployment rate — a drop from 9.9% last month — you get a mis-guided picture of what's actually happening in the job market. Things are getting worse, not better.

Less alarming, but still depressing, is that the average hours worked declined, along with hourly earnings. I firmly believe that this reflects a "new normal" in terms of the standards of living and quantity of material wealth that Americans will have to become accustomed to, for quite some time.