- WASHINGTON (Reuters) - For
President Bush and his economic team, Friday's news that the U.S. jobless
rate fell to its lowest level in more than a year must have looked heartening
-- at first.
- But a closer look at the Labor Department report told
a far bleaker story, with 433,000 Americans categorized as "discouraged
workers" -- those who have given up looking for a job because they
have abandoned hope of finding one.
- In December alone, Labor statisticians dropped 309,000
Americans from the labor force, no longer counting them as unemployed because
they have stopped looking for work. That cut the participation rate to
just 66 percent, a level not plumbed since recession-plagued 1991.
- Economists believe the drop in the labor force masks
a much higher jobless rate -- perhaps as high as 9 percent, according to
Anthony Chan, chief economist at Banc One Investment Advisors in Columbus,
- "The decline in the unemployment rate is the most
misleading aspect of this employment report," said Chan. "It's
a sham because of how we got there -- the labor force dropped precisely
because more people became discouraged."
- Usually, out-of-work Americans rejoin the job hunt as
the economy strengthens, believing growth will spur hiring. But despite
more than two years of expansion since the end of the 2001 recession, America
remains locked in a jobless recovery and the labor force is falling, not
- NOT BUYING THE HYPE
- Wells Fargo chief economist Sung Won Sohn said all the
talk lately about the booming economy and rising stock market did little
to persuade employers or job-seekers that their prospects were picking
up as 2003 drew to a close.
- "Despite all the hoopla, neither businesses nor
potential employees have confidence in the economy. They're not believing
all the stories about a strong and healthy economy given by the economists
and the government," Sohn said.
- "Economic growth is great, but the job market is
- While the economy raced ahead at an annual rate of 8.2
percent in the third quarter of 2003 on the back of Bush's summer tax cuts
and a booming housing market, job growth remains tepid. Since July, 278,000
nonfarm jobs have been created -- paling in comparison to the 2.3 million
lost since Bush took office.
- Sohn said many of the discouraged workers are likely
refugees from the factory sector, where 2.8 million jobs have been cut
in 41 straight months since the industry's last peak in July 2000. With
many jobs gone forever to cheap-labor countries like China or India, workers
have little hope of finding work that can compare with the $20-an-hour
jobs they lost, Sohn said.
- "People who lost jobs in manufacturing, especially
some of the older workers, they look at the landscape and say, 'why should
I waste my time?' And they simply drop out of the labor force," Sohn
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