Is The Lower Unemployment Rate Fact or Fiction

     By: Candice Rosario

         For the first time since President Obama took office, the unemployment rate is below 8.00%. Mitt Romney argues that the rate has only gone down, due to the way it is calculated. According to an online     Fox news article by Chris Liable (2012) Romney places unemployment rates at above 11%. President Obama sees the lower unemployment rate as a sign of slow and steady progress. The candidates have different views on the reasons behind the decreased rate of unemployment. What could be viewed as the most accurate explanation?                                                                


Mitt Romney’s explanation of the lower unemployment rate lies in his argument of how unemployment is calculated. He specifically calls into account “The Labor Force Participation Rate”. The answer to the question of “What is the Labor Force Participation Rate?” I found at About.com written by Mike Moffat (2012) : “The labor force participation rate is the percentage of working-age persons in an economy who:
So what is in fact the truth in regards to the lower unemployment rate?  As far as month to month progress of the unemployment rate and the labor force participation rate for the year 2012 the actual numbers from August to September where 63.5 and 63.6. What this means is the number of people actively working or looking for work was actually up by .1%.  So in fact the new unemployment rate is accurate and was not affected by the labor force participation rate.

Are employed

Are unemployed but looking for a job”

Based on this information, Mitt Romney’s explanation of the lower unemployment rate is that, less people are looking for jobs. Therefore they are not being accounted into the equation being used by the department of labor to calculate unemployment rates. If less people are being accounted for and the amount of jobs being filled are relatively the same as the month before, than it would seem like more people are employed and this would seem like an accurate account of how unemployment rates went down.

         
        President Obama seemed to view the new lower unemployment rate with optimism and a sign that the economy is headed in the right direction.  He did however acknowledge in an article that appeared in WSJ.com written by Laura Meckler and Danny Yadron (2012) [that]: “Today’s news certainly is not an excuse to try and talk down the economy to score a few political points. It’s a reminder this country has come too far to turn back now.” This statement definitely seems to give the impression that although progress has been seen this month; the unemployment rate is far from where it needs to be in order for our economy to be considered in recovery.

         
         In essence what each candidate is stating is their own version of the truth. After reviewing the “Labor Force Statistics from the Current Population Survey” (Bureau of Labor Statistics Data), I was able to see the labor force participation rates from the year 2002- present.  Mitt Romney is correct in his statement that if the number of people looking for work were the same as when President Obama took office, the unemployment rate would be at about 11%. That is because in 2009 the labor force participation rate was between 65.7 and 64.6. What this means is a lot more people were looking for jobs then, than there are now in 2012.  President Obama’s version of the facts is also correct in how they pertain to the current numbers in the forms of unemployment rates and the labor force participation rate.  

 References

Laible, C. (2012, October 08). Romney gives alternate reason for drop in

unemployment rate. Fox News. Retrieved from

politics.blogs.foxnews.com/2012/10/08/Romney-gives-alternate-reason-

drop-unemployment-rate

Moffatt, M. (2012). What is the labor force participation rate? Retrieved

from economics.about.com/od/unemploymentrate/f/labor_force.htm

Meckler, L., & Yadron, D. (2012, October 5). Obama, Romney focus on

unemployment report. WSJ.com. Retrieved from

online.wsj.com/article/SB1000087239639044422310457803855165043517

8.html?mod=Googlenews_wsj

Bureau of Labor Statistics Data, Databases, Tables & Calculators by

Subject. (2012). Labor force statistics from the current population survey

[Graphs]. Retrieved from data.bls.gov/time series/LNS11300000/