Is the unemployment rate misleading?

Floyd Norris pushes back against the claim the falling unemployment rate put out by the Bureau of Labor Statistics is misleading because it doesn’t count the growing number of people who’ve given up looking for work:

Each January the bureau updates its population estimates, and this update was particularly large because it had a new census to use. The policy is to not revise the earlier unemployment survey numbers, so sometimes there are big apparent changes that are not actually there. That is what happened in January.

The government says that the estimate changes reduced the labor force participation rate by 0.3 percentage points. Without the new estimates the number would have been unchanged from December to January.

The changes had no effect on the unemployment rate.

Forbes’s Peter Ferrara counters that the labor participation rate has been dropping continuously since 2009. Ezra weighed in on this debate a few weeks ago.

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