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Trump’s absurd claim that the ‘real’ unemployment rate is 42 percent

(Spencer Platt/Getty Images)

“Our real unemployment rate is 42 percent.”

—Donald Trump, in an interview with Time magazine, posted Aug. 18, 2015

Only a couple of months ago, in his presidential announcement speech, real-estate developer Donald Trump said the “real” unemployment rate was 18 to 20 percent, which earned him a “false” from PolitiFact.

As PolitiFact noted, while the official unemployment rate now is 5.3 percent, there is a measure issued by the Bureau of Labor Statistics known as the “labor underutilization” rate, which at the time was 10.8 percent. This measure includes people who want to work but who have not looked for work recently enough to be counted in the most commonly used measure of the unemployment rate. But even that was half the level cited by Trump, making his statement false.

Now he’s touting a figure that is more than double his previous claim. How does he figure that?

The Facts

Trump hints at his method in the interview with Time. “I saw a chart the other day, our real unemployment – because you have ninety million people that aren’t working,” he said. “Ninety-three million to be exact. If you start adding it up, our real unemployment rate is 42 percent.”

Trump may have seen a chart, but he misread it. Yes, the BLS shows that there are 93.7 million people “not in the work force,” but the vast majority of those people do not want to work. Most are retired or simply are not interested in working, such as stay-at-home parents.

It is correct that the labor participation rate has been dropping during the Obama presidency, from 65.7 percent in 2009 to just under 62.6 percent this year, according to the BLS. It is a worrisome trend, especially because the participation rate for workers between ages 16 and 54 fell sharply during the Great Recession and still hasn’t fully recovered.

But the Federal Reserve Bank of Chicago in 2012 concluded that just over half of the post-1999 decline in the participation rate comes from the retirement of the baby boomers. Barclays economists, meanwhile, say that just 15 percent of the drop in the labor force stems from people who want a job and are of prime working age (25-54).

In any case, Trump was not talking about the labor participation rate. He simply took the number associated with it and declared that is the number of unemployed people in the country. (Trump’s math is a bit fuzzy, but if you combine the 93.7 million not in the labor force with the 8.2 million who are unemployed, as well as underutilized workers, you end up with about 42 percent of the 250 million people listed as the “civilian noninstitutional population.”)

Interestingly, former Reagan administration official David Stockman wrote a blog post in June in which, as part of an attack on Federal Reserve policies, he also asserted the unemployment rate was 42 percent. He came at it a different way, counting the potential labor hours (420 billion) if every adult American between the ages of 16 and 68 worked a full-time job. Since only 240 billion labor hours were supplied to the U.S. economy in 2014, he said that means the “real” unemployment rate was 42.9 percent.

But Stockman also conceded: “We have to allow for non-working wives, students, the disabled, early retirees and coupon clippers. We also have drifters, grifters, welfare cheats, bums and people between jobs, enrolled in training programs, on sabbaticals and much else.”

Indeed, the BLS estimates that nearly 20 million people work part-time for noneconomic reasons, compared to 6 million who are forced to do so because that’s all they could find. So assuming everyone should have a full-time job is also misleading.

The Pinocchio Test

Trump has asserted a ridiculous estimate. Even a President Trump would be unable to make much of dent in this supposed unemployment rate, given that most of the Americans he is counting as “unemployed” are not in the labor force by choice.

If 20 percent was false, 42 percent is worthy of Four Pinocchios.

Four Pinocchios

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Four Pinocchios
“Our real unemployment rate is 42 percent.”
in an interview with Time magazine
Tuesday, August 18, 2015