Unemployment Rate Hits 5.7% with Addition of 257,000 Jobs

The latest employment figures coming out of the Department of Labor are a mixed bag of sorts.

According to a new report from the federal department, the unemployment rate rose to 5.7 percent from 5.6 percent as the United States economy added 257,000 in January, which has many economists saying the labor market started on a strong note in the New Year.

The biggest labor gains were seen in the sectors of construction, healthcare and retail. Surprisingly, all three levels of government slashed 10,000 jobs.

In addition, the jobs numbers for the months of November and December were revised upwards to a total of 423,000 and 329,000, respectively. Also, economists had projected job creation of 230,000 last month.

Wages remain sluggish and a concern for both workers and officials. Wage growth rose just eight cents to a median $24.75 in January after declining in December. Wages have increased 2.2 percent over the past year. The average work week was unchanged at 34.6 hours.

looking for job

Friday’s employment data is certainly positive news, particularly after a plethora of other economic figures were released Thursday highlighting that the U.S. trade gap widened, productivity fell in the fourth-quarter and weekly jobless claims were up.

However, the unemployment rate may be deceiving the American public, says Jim Clifton, chief executive officer and chairman of polling firm Gallup, who stirred up some controversy this week when he published a blog post questioning the way the federal government calculates the jobless rate.

Essentially, Clifton believes the 5.6 percent unemployment rate – now 5.7 percent – is misleading and a “big lie.”

“None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed,” said Clifton. “Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast ‘falling’ unemployment.”

According to Clifton, Americans who are severely underemployed – workers who want to work full-time but are working part-time – as well as the long-term, permanently and depressingly unemployed aren’t included in the unemployment statistics.

What is the real unemployment rate? Well, John Williams, the owner of Shadow Government Statistics, says it’s really in the late-teens or early-twenties if you calculate the way the government did throughout the Great Depression and up until the administration of Lyndon Baines Johnson.

Those who detest the way the DOL conducts the unemployment rate prefer to look at both the U-6 and the labor force participation rate. The former is defined as “total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers” and the ladder is exactly that: the number of people participating in the labor market (this number is at a 37-year low).

The U-6 suggests joblessness increased in the past three months and is at 11.3 percent.