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The Reason Why The Unemployment Rate Dropped: The Labor Participation Rate Is At Fresh 31 Year Lows

Tyler Durden's picture


Curious why the unemployment rate dropped from 8.3% to 8.1%, even as just 96,000 jobs were added? The labor participation rate declined from 63.7% to 63.5%, the lowest since 1981. It means that somehow in August the labor force declined by 368,000 people, which is a paradox since according to the household survey 119,000 jobs were lost in August, yet at the same time the unemployment rate dropped. Remember: it is an election year.


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Fri, 09/07/2012 - 08:46 | 2771119 101 years and c...
101 years and counting's picture

once we drop a few hundred k out of labor force next month, the tylers will have to expand that chart out at least 2 more decades to find a lower number.

Fri, 09/07/2012 - 08:52 | 2771156 ihedgemyhedges
ihedgemyhedges's picture

I thought the participation rate set an all time high new record.......oh wait, that was the foodstamp participation rate.  My bad......

Fri, 09/07/2012 - 09:42 | 2771418 FMR Bankster
FMR Bankster's picture

Nobody could do better. Bill Clinton told me so and he wouldn't lie would he?

Fri, 09/07/2012 - 10:29 | 2771594 Metalredneck
Metalredneck's picture

Did you share a cigar with him?

Fri, 09/07/2012 - 11:28 | 2771832 Hugh_Jorgan
Hugh_Jorgan's picture

We hear the highly decpetive BLS U-3 # when we should be hearing the BLS U-6 # from our elected "representatives". Worse, the best representation of reality is only available outside the Government @ and we will NEVER hear that number (of ~22% unemployment and climbing) from the people in charge.

Fri, 09/07/2012 - 09:04 | 2771229 smlbizman
smlbizman's picture

does this chart correlate to when regan went into borrow and spend mode...and shows the party is over and the waitress just gave us the check...

Fri, 09/07/2012 - 09:23 | 2771326 Coldsun
Coldsun's picture

That comment was a miss. We'll give you another chance. This time try proper grammar if you want to make an intelligent point and also try not to spew incoherent political crap.

Ready, go.

Fri, 09/07/2012 - 11:12 | 2771687 toady
toady's picture

I think he/she was trying to point out the 81 date when Ronnie started the whole deficits-don't-matter thing. Turn the calender back to todays date and realize DEFICITS DO MATTER.

Also back in today, these numbers are an obvious ploy. Next month when it's magically 7.9 obama can say 'I said below 8, and I keep my promises'!

Fri, 09/07/2012 - 12:25 | 2772067 hawks5999
hawks5999's picture

I think this correlates more to when the Baby Boomers fully entered the labor force and reflects them now leaving. I would expect labor force participation to continue to drop back to about 1972 levels. in the coming decade.

Fri, 09/07/2012 - 14:04 | 2772498 gloogle
gloogle's picture

Except that the "boomers" are now putting off retirement becuase they can't afford to retire, and are boosting the labor force participation rates for those over 65 to record levels!  Anyone out there think this trend will change anytime soon?

Fri, 09/07/2012 - 09:20 | 2771320 midtowng
midtowng's picture

That's what I was thinking. That chart looks like the participation rate is about to hit mid-70's levels.

Fri, 09/07/2012 - 12:28 | 2772082 hawks5999
hawks5999's picture

I would say early 70's levels. 1972 to be exact. The long term trend shows that this participation drop off is the result of Boomers leaving the workforce for "retirement". Which these days means food stamps and medicare.

This chart makes me thing 1972 is our target participation rate.

Fri, 09/07/2012 - 08:46 | 2771120 Dr. No
Dr. No's picture

No doubt due the seasonal warm weather.

Fri, 09/07/2012 - 08:50 | 2771141 GetZeeGold
GetZeeGold's picture



Don't forget the rain......we have to move from the staduim.....looks like there could be rain.


Fri, 09/07/2012 - 08:50 | 2771148 EscapeKey
EscapeKey's picture

Plus "all those retirees" - who, according to the same fraudnesian beancounters who make this argument, obviously won't withdraw funds from the equity markets.

All assumptions always work in favour of the status quo.

Fri, 09/07/2012 - 09:43 | 2771427 Joeprimo55
Joeprimo55's picture

Can we still blame bush?

Fri, 09/07/2012 - 08:46 | 2771123 Jason T
Jason T's picture

The End of Work.


Thank you China for the trade deficit, Productivity Growth, Ben Confetti, Food Stamps, Disability...

Fri, 09/07/2012 - 09:50 | 2771450 SelfGov
SelfGov's picture

Thank goodness this country didn't encourage China the entire time.

Fri, 09/07/2012 - 08:46 | 2771124 GetZeeGold
GetZeeGold's picture



The Reason Why The Unemployment Rate Dropped


Becuase there's no jobs?


Fri, 09/07/2012 - 08:47 | 2771125 rubearish10
rubearish10's picture

Fuzzy math?

Fri, 09/07/2012 - 08:47 | 2771126 azzhatter
azzhatter's picture

We don't need no steenking jobs. Obama gonna pay my mortgage

Fri, 09/07/2012 - 09:39 | 2771406 Whoa Dammit
Whoa Dammit's picture

If you earn a lot of really good karma in this life, you might get lucky in the next one and come back as a transgender height impaired undocumnented alien from FreeStuffistan with 12 children and a bad case of chronic fatigue. Then everything you need will be handed to you. :-).

Fri, 09/07/2012 - 08:48 | 2771131 John Law Lives
John Law Lives's picture

Maybe Obumble will have statisticians come up with a clever formula to calculate that the national debt doesn't really exist.  We are actually running a BUDGET SURPLUS.  Four more years!

100% FUBAR.

Fri, 09/07/2012 - 08:51 | 2771153 Sauk Leader
Sauk Leader's picture

I don't think he knows anyone with those qualifications. Maybe Rex Nutting at Marketwatch?

Fri, 09/07/2012 - 10:27 | 2771582 Gordon Freeman
Gordon Freeman's picture

Nice to know there's someone else out there who despises that fungal toad.  Thank you!

Fri, 09/07/2012 - 09:12 | 2771278 Hobbleknee
Hobbleknee's picture

Maybe Corzine could make it vaporize.

Fri, 09/07/2012 - 08:48 | 2771133 t_kAyk
t_kAyk's picture
I come home one particular evening
The landlady said, "You got the rent money yet?",
I said, "No, can't find no job"
Therefore I ain't got no money to pay the rent
She said "I don't believe you're tryin' to find no job"
Said "I seen you today you was standin' on a corner,
leaning up against a post"
I said "But I'm tired, I've been walkin' all day"
She said "That don't confront me,
long as I get my money next Friday"
Now next Friday come I didn't have the rent,
and out the door I went

- George Thorogood and The Destroyers

Fri, 09/07/2012 - 09:42 | 2771422 SmallerGovNow2
SmallerGovNow2's picture

Great tune. Cheers, one bourbon, one scotch, and one beer...

Fri, 09/07/2012 - 09:42 | 2771423 Clever Name
Clever Name's picture

+1 for that!

Now when he come out tha house

I could see it in his face

I knew it was no

He said, I dunno man, she kinda funny

I said I know

Everybody funny

Now you funny too.


Fri, 09/07/2012 - 09:53 | 2771463 recidivist
recidivist's picture

voted least likely to succeed in his HS class.  Suck it, bitchez!

Fri, 09/07/2012 - 08:48 | 2771134 trebuchet
trebuchet's picture

Because there is NO POINT in looking for jobs - its called "Voluntary" unemployment

Fri, 09/07/2012 - 08:48 | 2771135 Everybodys All ...
Everybodys All American's picture

By the November election Mr. Choomwagon will have a seven handle on the unemployment number. It's a virtual certainty.

Fri, 09/07/2012 - 08:51 | 2771155 Beam Me Up Scotty
Beam Me Up Scotty's picture

It's just more of the same. Baffle em with bullshit.

Fri, 09/07/2012 - 09:52 | 2771460 recidivist
recidivist's picture

Prosperity is just around the corner

Fri, 09/07/2012 - 10:29 | 2771593 exi1ed0ne
exi1ed0ne's picture

Prosperity every other day - yesterday and tomorrow.

Fri, 09/07/2012 - 08:49 | 2771139 docj
docj's picture

Welcome Back Carter.

Fri, 09/07/2012 - 09:17 | 2771305 trebuchet
Fri, 09/07/2012 - 09:23 | 2771334 phalfa5
phalfa5's picture

gonna go buy me some Billy Beer wif my food stamps...  aint gubmint great?

Fri, 09/07/2012 - 18:18 | 2773331 roadhazard
roadhazard's picture

Billy Beer was $100 a can a long time ago. I'm too lazy to check ebay now.

Fri, 09/07/2012 - 08:52 | 2771158 bdc63
bdc63's picture

This has absolutely gotta be killing government income from taxes ...

... so this is what a death spiral looks like ... good to know ...

Fri, 09/07/2012 - 09:26 | 2771354 Joe Davola
Joe Davola's picture

Cue Bruce K with the latest dismal outlook for SSI, payroll tax rate not withstanding.

Fri, 09/07/2012 - 08:52 | 2771165 Antidisestablis...
Antidisestablishmentarianismist's picture

Interesting to compare the Reagan years to the Obama years on this chart.  How can anyone doubt that both men brilliantly achieved their aims?

Fri, 09/07/2012 - 08:54 | 2771170 buzzsaw99
buzzsaw99's picture

1982 was a very sucky year for jobs

Fri, 09/07/2012 - 09:15 | 2771296 insanelysane
insanelysane's picture

I was in high school and worked the summer as a lifeguard.  I was making $5/hr which was a shit load as my buddies working at McDs were making around half that.  Nowadays kids can't get jobs at McDs because that is where all of the former factory workers go.

Fri, 09/07/2012 - 09:34 | 2771385 azzhatter
azzhatter's picture

the average age at mcdonalds in my area for employees looks to be over 50

Fri, 09/07/2012 - 10:32 | 2771601 ParkAveFlasher
ParkAveFlasher's picture

Well, who's gonna go out and pay the bills if junior won't get off netflix long enough to take a shower?

Fri, 09/07/2012 - 11:03 | 2771751 toady
toady's picture

Yep. I graduated HS in 82. Things were so bad I had to join the Air Force.

Fri, 09/07/2012 - 08:55 | 2771173 Peace is the x-axis
Peace is the x-axis's picture

Deja vu. Exactly the same bogus outcome as Australia's official unemployment "fall" earlier this week. Thanks to a 26 year low in participation. We too have an incumbent Fearless Leader prepping to go to the polls.

Fri, 09/07/2012 - 08:55 | 2771178 tmosley
tmosley's picture

Obama rounded up a bunch of unemployed people and had them shot.

Fri, 09/07/2012 - 09:16 | 2771299 JimBowie1958
JimBowie1958's picture

No prob....they were all terrorists.

Fri, 09/07/2012 - 09:38 | 2771404 LawsofPhysics
LawsofPhysics's picture

More death worshipping Tom? I am disappointed. Enjoying a silver boner this morning however, so that is nice.

Fri, 09/07/2012 - 10:14 | 2771538 francis_the_won...
francis_the_wonder_hamster's picture

"Obama rounded up a bunch of unemployed people and had them shot."

I was going to say that it is unlikely Obama would have those likely to vote for him shot, but then I remembered that the existence of a pulse is not a prerequisite to vote for the Dems.

Fri, 09/07/2012 - 10:33 | 2771605 Metalredneck
Metalredneck's picture

Can you vote from a FEMA camp?

Fri, 09/07/2012 - 08:56 | 2771180 firstdivision
firstdivision's picture

Must be all those people that saved for retirement by buying and FB shares.

Fri, 09/07/2012 - 08:55 | 2771181 Wishfulthink
Wishfulthink's picture

Food Stamps are good for the economy, extend unemployment benefits, give additional student loans, need more stimulus, call Uncle Ben, Vote for Black Jesus, soon you will be in Valhalla.

Fri, 09/07/2012 - 08:56 | 2771190 Cassandra Syndrome
Cassandra Syndrome's picture

Fools. We don't need to produce or work anymore! Draghi and the Bernank can print all the stuff that we need, with their Star Trek replicators!

Fri, 09/07/2012 - 08:57 | 2771196 RiskAverseAlertBlog
RiskAverseAlertBlog's picture

Well, now that the DNC Nuremberg rally is over, the Fuehrer might need to pull hard on those strings animating his puppet in the White House, possibly using some staged event to stroke the engine of his American war machine.

Fri, 09/07/2012 - 08:57 | 2771200 JustObserving
JustObserving's picture

Do you need any more proof that all our economic numbers are BS? Official unemployment rates keep falling while the employment situation gets more desperate everyday.

Shadowstats has unemployment at 22.5%.  

"The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers."

Fri, 09/07/2012 - 08:59 | 2771207 bigfire
bigfire's picture

There are lies, damn lies and BLS.

Fri, 09/07/2012 - 09:05 | 2771225 Statix
Statix's picture

Labor force can drop quite a bit until it reaches historical lows:


if you go back to 1948 it was 58%...

Fri, 09/07/2012 - 09:08 | 2771245 adr
adr's picture

You mean when most of the population outside the cities worked as independent farmers.

Fri, 09/07/2012 - 09:14 | 2771290 Little T.
Little T.'s picture

...and women's participation rate was <35%

Fri, 09/07/2012 - 09:30 | 2771373 reading
reading's picture

I am going to give you a buy here and assume that you realize that if our participation rate is close to 1948 we've got some serious problems in that at that time the vast majority of households were one income. And you could have a Leave it to Beaver existance on one income which is certainly not possible now.  

Fri, 09/07/2012 - 09:06 | 2771236 MFLTucson
MFLTucson's picture

This is pathetic.  What kind of country would even consider reelecting a man with such results?  He may not have complted his mission to detroy this country but, he has certainly made it well over the 50% mark.  

Fri, 09/07/2012 - 09:11 | 2771269 azzhatter
azzhatter's picture

What kind of country elected a man with no past in the first place. Flowery messages of hope and change don't cut it with me. Of course on the other hand theres McCain

Fri, 09/07/2012 - 15:20 | 2772795 Westcoastliberal
Westcoastliberal's picture


...and don't forget (wait for it...) PALIN!

Fri, 09/07/2012 - 09:20 | 2771318 paulie
paulie's picture

In fact the Jewish lobby is now supporting Romney.

Whatever president wins it'll be because of that support. I think Churchill used to say that politics is the choice between the bad and the disgusting.

Is Ron Paul still running for office ?

Fri, 09/07/2012 - 09:09 | 2771257 recidivist
recidivist's picture

Clearly the solution to lowering unemployment is to make it harder to stay on unemployment, just like they are doing with Florida voters by requiring picture id, etc.  That will make the numbers look good come November, and beyond to the midterm.  Never mind all the people sleeping in cars and cardboard boxes.  Back in the day we used to call them bums, but our more sensitive side decided to bestow on them the more dignified moniker of homeless, or domicile challenged.

Fri, 09/07/2012 - 09:12 | 2771275 azzhatter
azzhatter's picture

Transient, they're in transition

Fri, 09/07/2012 - 09:18 | 2771312 insanelysane
insanelysane's picture

People whine that voter ids are an unjust burden yet we live in a country where the law is that everyone needs to purchase healthcare insurance.  Somehow that isn't a burden.  

You can ask someone for their health insurance papers but God help you if you ask for any other type of identification papers.

Fri, 09/07/2012 - 09:35 | 2771391 StychoKiller
StychoKiller's picture

If a policeman asks you to show your ID, and you ain't got none, you could get arrested for vagrancy.

Fri, 09/07/2012 - 09:17 | 2771304 ptoemmes
ptoemmes's picture

No president, since FDR, has been re-elected with an unemployment rate above 7.2%.

He's gonna run out of runway. He needs too many people to "drop out" - the math escapes me.

Fri, 09/07/2012 - 09:23 | 2771339 insanelysane
insanelysane's picture

Math is easy and plenty of runway.  When you can't fudge the numerator enough you can always fudge the denominator.


Day before election we get a low 7 handle with everyone saying look at the "trend".  Day after election, revised upwards to mid 7 with an oops from BLS.  

Sep 2012 - 7.8 

Oct 2012 - 7.3 revise to 7.5


Reality: 15 trending to 20

Fri, 09/07/2012 - 09:33 | 2771380 reading
reading's picture

Hey Tyler, 


What does the participation rate have to drop to by the November number to get the UE rate under 8?


Fri, 09/07/2012 - 11:24 | 2771816 yars
yars's picture

63.1%. 63.2% if Nov employed is within 150K of Aug. Don't see that happening.

Fun fact: If our participation rate was the same as five years ago, the unemployment rate would currently be 11.3%.

Fri, 09/07/2012 - 09:20 | 2771319 PapSmear
PapSmear's picture

Biden needs to get Corzine on the phone.

Fri, 09/07/2012 - 09:21 | 2771323 Frastric
Frastric's picture

The depression continues...

Fri, 09/07/2012 - 09:22 | 2771325 Debeachesand Je...
Debeachesand Jerseyshores's picture

Rick Santelli has just predicted that the Nov2nd unemployment rate would be 7.9% or lower,just in time for the Nov. 6th Election.

I will have to agreed Mr Santelli prediction.


Fri, 09/07/2012 - 09:33 | 2771384 Everybodys All ...
Everybodys All American's picture

This prediction was and has been made months ago btw by many in the know. It's unfortunately far too easy to predict what this administration will do to get elected.

Fri, 09/07/2012 - 09:24 | 2771340 Backupthesilvertruck
Backupthesilvertruck's picture

I honestly do not understand how the majority of Americans still believe in the ideas of the Democratic or Republican Party. The leaders of these parties are simply puppets. Why is it so hard to see?

Fri, 09/07/2012 - 09:51 | 2771456 recidivist
recidivist's picture

They want to believe.  Hoping is so much less work than rioting.

Fri, 09/07/2012 - 09:36 | 2771396 alfred b.
alfred b.'s picture


       War anyone?


Fri, 09/07/2012 - 10:34 | 2771609 American Sucker
American Sucker's picture

Welcome to the limits of the Debt Money and Fossil Fuel Economy.

Fri, 09/07/2012 - 10:41 | 2771645 epwpixieq-1
epwpixieq-1's picture

Well, the US work force is 'getting more and more efficient", and this, especially with lack of sound education in the sciences, makes this culture self destructing in a slow motion. And this will not be very visible on the surface, because in order to see the degradation of the values and qualities of the people, one has to have a stable etalon to compare with.


Fri, 09/07/2012 - 12:04 | 2771991 Snakeeyes
Snakeeyes's picture


Labor force participation stinks. Add in all the people on disability and food stamps and .. the goverment is encouraging people to drop out.

Sat, 09/08/2012 - 02:18 | 2774017 Colonel Klink
Colonel Klink's picture

Only reason the numbers don't look worse it because Obama channel stuffed them into the DHS,TSA, and all the other government alphabet soup agencies.  The new American gestapo bitchez!

If anyone asks, I never said that. General Oburkahalter would cut my head off!

Mon, 09/10/2012 - 03:42 | 2777757 brainlee
brainlee's picture

Only reason the numbers don't look worse it because Obama channel stuffed them into the DHS,TSA, and all the other government alphabet soup agencies. The new American gestapo bitchez!

If anyone asks, I never said that. General Oburkahalter would cut my head off!

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