Can good unemployment numbers be bad?

Commentator Robert Reich says the defining political issue of 2012 won’t be the government’s size. It will be who government is for.

Kai Ryssdal: There are still 10 months -- give or take -- until election day. A lot can happen between now and then. But the economy's still going to be a big issue. One of the key indicators of how things are going -- the unemployment rate -- has been falling.

But commentator Robert Reich points out that's not necessarily good news for the president.


Robert Reich: Two years ago the unemployment rate was 9.9 percent. Now it's 8.5 percent. That's good news for President Obama. Voters tend to pay more attention to the direction the economy is moving than to how bad or good it is in the months before election day. The trend looks promising.

This is until you count the number of working-age Americans who have stopped looking for work over the past two years because they can't find a job. Add to that all the young people too discouraged even to start looking.

You see, the Bureau of Labor Statistics counts people as unemployed only if they're looking for work. If they stop or are too discouraged even to enter the job market, they're not counted.

If all these discouraged workers were included in the count, today's unemployment rate wouldn't be 8.5 percent. It would be 9.5 percent. That's only a bit down from the 9.9 percent unemployment rate two years ago.

But the genuinely good news, is the job market is improving a bit. The Bureau of Labor Statistics tells us that 200,000 new jobs were added in December. That doesn't put much of a dent in the 10 million jobs we're down since the recession began -- jobs we've either lost or need to add to keep up with population growth. At this rate we won't return to our pre-recession level of employment until 2019. But, hey, it's at least the right direction.

Yet here's the irony. This little bit of good news is likely to raise the hopes of many people who have been too discouraged to look for jobs.  Many of them will now start looking.

But if they don't find a job -- and, let's face it, the chances are still very slim -- they'll now be counted as unemployed.

This means the unemployment rate is likely to edge upward in coming months -- which will be bad for the President, because it will look as though the employment trend is going in the wrong direction again.

This is how a little bit of good economic news can mean bad news politically.


Ryssdal: Robert Reich teaches public policy at the University of California Berkeley.  His most recent book is called "Aftershock: The Next Economy and America's Future." Take a second to send us your thoughts.  

About the author

Robert Reich is chancellor's professor of public policy at the University of California, Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.

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