“Ninety-four million Americans are out of the labor force,” President Donald Trump said on Tuesday night.
It’s a massive statistic that sounds alarming since the number represents nearly one in three Americans. But what does it mean, and why does it conflict with headlines that suggest the US labor market is in good shape?
“Not in Labor Force” includes people who don’t need to work
The Bureau of Labor Statistics (BLS) tracks employment numbers to determine the unemployment rate, a seemingly simple number that can be calculated multiple ways. The current BLS data series Trump referenced, called “Not in Labor Force”, came in at 94.4 million in January of 2017.
Here’s the official definition: “Not in labor force includes all people 16 years old and over who are not classified as members of the labor force. This category consists mainly of students, housewives, retired workers, seasonal workers interviewed in an off season who were not looking for work, institutionalized people, and people doing only incidental unpaid family work (less than 15 hours during the reference week).”
The Census Bureau’s definition makes clear how expansive Trump’s number is. It includes essentially anyone over sixteen years old who doesn’t have a job and isn’t looking for one. So the number Trump stated includes a lot of people you wouldn’t be especially worried about not working: High school students, stay-at-home moms, guys in prison, hospitalized and institutionalized folks, and your 98-year-old great aunt.
89 million “do not want a job now”
In fact, according to BLS, about 89.4 million of those people explicitly “do not want a job now.” That leaves about 6 million Americans who want a job, adjusting for rounding — 93% lower than Trump’s number.
And so, this is why you often notice major discrepancies between the official unemployment rate, which was 5.1% in January, and the rate implied by Trump’s distorted citation of 94,000,000 people who are out of the labor force. Misapplying figures in this way is how then candidate Trump reached the conclusion that the real rate of unemployment could be as high as 42% — which he stated in his victory speech after the New Hampshire primary in February of 2016.
Of course, as with all economic data, matters are never entirely straightforward. In January of 2017, one of BLS’s key “alternative measures of labor underutilization” showed a proxy rate of unemployment over 10% — about double the official unemployment rate.
But still nowhere near the truly grim numbers that President Trump has stated.
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