NYT: Black Workers’ Wages ‘Are Finally Rising’ After ‘Decade of Stagnation’

The New York Times reported Friday morning that African American workers are seeing their wages rise for the first time after a “decade of stagnation,” further evidence of the strength of the U.S. economy.

The Times report came as the U.S. Bureau of Labor Statistics reported that the economy created 225,000 new jobs in January, smashing expectations. Unemployment ticked upward to 3.6% — but that was due to more workers entering the labor force, generating the highest labor force participation rate thus far in the recovery from the Great Recession. Average hourly wage gains also rose slightly year-on-year, to 3.1%.

Black unemployment is near all-time lows, and now wages are climbing, the Times reported Friday:

President Trump frequently celebrates the experience of black workers, noting correctly that the group’s unemployment rate is at its lowest on record.

Their wages are also going up — a New York Times analysis of government data found that wage growth for black workers has accelerated recently after lagging for much of the decade-long economic expansion.

“Unemployment ticked upward to 3.6% — but that was due to more workers entering the labor force, generating the highest labor force participation rate thus far in the recovery from the Great Recession....”

The labor force participation rate is the number that everyone should pay attention to, NOT the “unemployment rate.”

The UE rate is a sham figure, and easily manipulated. It counts the number of people actively searching for a job as a percentage of those actually employed + those searching. So, for example (and what follows is HIGHLY simplified), if 76 people have jobs and 4 don’t but are looking for one, the UE rate is 4/(76 + 4) = 5%.

But it is a false number. What if the other 20 workers in the measured group have been unemployed for 2 years, and have stopped even looking for a job because they are discouraged? Well, the UE rate does NOT count them - but they aren’t working and would actually like to do so if the jobs were available. So the REAL UE rate in that situation is 24/100 total workers = 24%, but it never shows up when the media reports the UE rate. All we know is that it is 5%.

However, the labor participation rate would and does pick that up. It accounts for 100 potential workers (people between 16 and 65, ALL of them) and says that the LPR is the number of people actually working/the total = 76/100 in this case, or 76% (which is an absurdly high rate in the real world - I don’t think that we reached that even in WW2), but I want to stick with this example for the sake of consistency).

OK, so what has happened NOW, in the real world, to drive up the UE rate, while the LPR went up (because that seems like a contradiction - how are more people working when the UE rate went up?)? Well, the economy in our simple little example got better, so 4 more people got a job. Now 80 are working. But because a lot of those 20 discouraged workers see their friends getting jobs, now they enter the labor market and start to look for jobs (but don’t have them yet). Let’s say that 8 of them enter the job search market. Now the UE rate is 8 looking/(80 working + 8 looking) = a 9.1% UE rate. OMG, what a disaster! Well, not really. Because now you have 80 people working, not 76, so your LPR is at 80%, accurately reflecting that there are both more jobs and more people working in those jobs. That’s a GOOD thing (and it is what is happening in the REAL world, right now).

Note that the UE rate can be manipulated easily: Just quietly change the definition of a “discouraged worker” to someone out of work and not searching for 1 year instead of 2. Then you have more discouraged workers, and a (supposedly) smaller labor force - so it automatically LOWERS the UE rate without anything real having changed (that’s called lying, something that the government is supremely good at doing). The LPR cannot be manipulated like this, not unless someone is literally going to lie in a big way about the number of people working, or the number of people between 16 and 65 - and that is VERY difficult to do, as any changes that would be meaningful would be easily spotted by literally thousands of economists, labor specialists, stock market prognosticators and population experts. It just can’t be done.

But you will NEVER, EVER see any kind of explanation like this in the media (even if the economically-illiterate morons even understood it, which at least 95% do not), because the government doesn’t want the truth out there, and the media dutifully reports what the government wants.

Look at the LPR, and look at the number of new jobs created. Those figures matter, and the easily manipulated UE doesn’t.

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