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By Al Jacobs
The most recent report from the U.S. Labor Department proclaims the nation’s official unemployment rate for May 2017 to be 4.3 percent—a 16-year low. From this glowing pronouncement, it’s reasonable to conclude there’s not a single American without a job that can’t quickly get one. Could it be unwanted unemployment is now a thing of the past?
While browsing through the newspaper carrying the favorable unemployment figure, I came upon this article: “Aliso Viejo-based Ambry Genetics testing laboratory will lay off 99 employees on June 30.” Apparently their new automated “super-lab” which can process 3,000 samples daily will replace salaried employees. In the same paper, I learned Lumina Media in Irvine will dismiss 59 employees on July 18; loan servicer Kondaur Capital Corp. of Orange will let 55 employees go on July 17; and Hines Growers of San Juan Capistrano will no longer need 115 people effective October 1.
But perhaps even more telling is the imminent closing and termination of 420 employees of 108-year-old retailer Dearden’s, with stores throughout Southern California, joining the list of soon-to-terminate retailers including Sears, Macy’s and JCPenny, as their customers turn to e-commerce and fast fashion stores.
Let’s add another set of numbers to the mix. According to the Labor Department’s Bureau of Labor Statistics, in December 2016, “a record 95,102,000 Americans were not in the labor force, 47,000 more than in November; and the labor force participation rate was 62.7 percent, a tenth of a point higher than in November.” So, how can the unemployment rate be 4.3 percent? Very simple: The Labor Department’s contrived definition of unemployment is “people without jobs that have actively looked for work within the past four weeks.” No one else may be counted, so the tens of millions of persons unable to find work do not thereby muck up the administration’s favorable employment statistics. How’s that for politicking at its finest?
A final thought: It’s my belief the effects of technology, the low wage rate in many nations and the ability of firms to relocate out of the country, could result in an actual unemployment rate equal to that of the Great Depression of the 1930s. However, by modifying our unemployed definition from “four weeks” to “four days,” unemployment can be reduced to less than one percent. And thus government solves the problem.
Al Jacobs, a professional investor for nearly a half-century, distributes a monthly newsletter in which he shares his financial knowledge and experience. You may view it on www.roadwaytoprosperity.com/.