GOP Governors Should be Cautious When Discussing Unemployment Rates

By: Patrick Hedger, Policy Director-American Encore

Most of the state governments in the US are now under GOP control, with Republicans both in the governors' mansions and holding the gavels in the various legislative chambers across the country. This is great news and it bodes well for the health of our republic. The being said, Republicans at the state level of power should be cautious when trying to trumpet their success, specifically when talking about the labor market and the employment situation.

A lot of Republican governors, some running for president, keep bringing up falling unemployment rates in their states. Yet, on the federal level, conservative policy experts have been battling fiercely to spread the message that our national unemployment rate is falling for all the wrong reasons. While we want to celebrate lower unemployment rates, the fact of the matter is that what we’re seeing is largely an illusion caused by a shrinking labor force. The video above does a great job at explaining the situation.

Americans have become deeply discouraged with the labor market. Some have given up looking for work altogether. This is an obvious problem for a number of reasons. More specific to this argument, this trend creates an issue with the unemployment rate calculations. We don’t count people who aren’t actually looking for work as unemployed for obvious reasons. People retire, go to school, stay at home, etc. So when people give up on the job market, after a certain period of time, they are no longer technically considered unemployed. The economy may not have improved, but the unemployment rate thus falls. This is reflected in another labor market metric monitored by the government called the labor force participation rate, which until recently has been largely overlooked.

Conservative policy experts have been fighting desperately to sound the alarm about the shrinking labor force participation rate. The current rate is at 30-year-lows. This means that fewer Americans as a percentage of the population are engaged in our labor market than at anytime since the 1970s. This is bad news that cannot simply be explained away by an aging population, as the drop off has been too dramatic. We’re finally starting to see news reports on the monthly employment statistic releases mentioning this critical metric, cautioning Americans to take the national unemployment rate statistic with a grain of salt.

With that, I caution my fellow conservatives across the country on the issue of unemployment. We can’t have discordant messages on this issue between conservatives in Washington and those in state capitals and still expect the American people to trust Republicans to govern. If the national unemployment rate is falling for the wrong reasons, it is more than likely the case that local unemployment rates are falling for unfortunate reasons as well. Simply focusing on a metric giving off false positives is lazy and dishonest. We can do better than that. Continue to make the case that at this juncture labor force participation is where the focus needs to be. Americans should feel encouraged to reenter the labor market, even if that results in temporarily spike in those being reclassified as “unemployed.”