Barack Obama and the Case of the Shrinking Workforce

The national unemployment rate as reported Friday stands at 9.7%, about 15 million people or is it?

In August, the total civilian workforce as calculated by the Bureau of Labor Statistics (BLS) was estimated to be 154.6 million. However, that is down 0.16% from 154.8 million in August 2008. The decline of approximately 256,000 (rounding error) is highly unusual since the workforce population is ever increasing thanks to immigration and other factors (graduation, divorce or other catastrophe (e.g., Bernie Madoff)). In August alone,1.09 million people entered the workforce according to the BLS.

Population growth in the U.S. is a given. The total civilian workforce grew 1.02% per year every year from 2001 to 2007 (ranging from 0.60% to 1.42% per year), even after the terrorist attacks in 2001 and the recession that followed in 2002, the population increased by 0.83% and 0.87% respectively. Indeed, since 1948 the total workforce has grown by an average of 1% per year, every year. Every year except one, 1951, which was not a recession year, where it shrank by 0.17%. Perhaps it was the ennui anticipated to attend the Eisenhower administration?

One might surmise that a decrease in the illegal population is to blame. Such a conclusion, while clever, would be mistaken. The Center for Immigrations Studies, a group widely lauded by the both right and left, estimates that some 1.7 million illegal immigrants may have returned to their home countries between the summer of 2007 and first quarter of 2009. Nevertheless, these people are largely excluded from the BLS’ calculation of total civilian labor workforce.

Indeed, according to the BLS, from August 2008 to August 2009, the number of Hispanics* in the civilian workforce increased, albeit only slightly, from 22.2 million to 22.3 million or 0.63%. While this is well below the 3.3% average growth of the Hispanic workforce population from 2001 through 2008, it is still growth. What’s more, the Hispanic workforce population is already 1.14% larger than the average of 2008 or 22.0 million.

It is not clear what caused the current decline in population. Of course, the perceived severity of the recession to come may have caused some smart people to head for the door. Also, a flight of capitalists may have accompanied Mr. Obama’s rise to power. But smart people and capitalists are what, 1 maybe 2% of the population, max?

One thing is certain however, if the population had grown at its historic average rate, the total civilian workforce would now be 157.9 million. Based on that number, the basic unemployment statistic would be 10.5% rather than the 9.7% it is now.

Calls to the BLS had not been returned at press time.

*A large chunk of the illegal population.