In 2017, the BLS estimates that just 861k Americans were added to the official labor force, the denominator, of course, for the unemployment rate. That’s out of an increase of 1.4 million in the Civilian Non-Institutional Population, the overall prospective pool of workers. Both of those rises were about half the rate experienced in 2016.

While population growth slowed last year, it produced, apparently, an almost constant participation rate. That suggests either statistical “fitting” or the same labor market conditions nowhere near strong enough to entice the millions (as many as 16.4 million) sitting outside the official definitions.

It works out to labor force growth averaging about +72k per month last year. Going back to March 2016 (the last month of SNAP work requirement waivers being pulled), the labor force has expanded by just +64k per month. These are, as noted earlier today, grim figures way, way out of the historical norm. Given the timing for when it started, it’s not drugs and gray hair.

 

It further undermines the unemployment rate, though that isn’t news. The official estimate has been at or below 5% for 27 straight months; it’s been 4.5% or less each of the last ten months of 2017.

By now it should be clear enough that the current 4.1% is a calculated number and nothing more. Like the old computer programming adage, GIGO remains an appropriate expectation (garbage in, garbage out). It’s a very poor basis for more than inflation expectations. Indeed, the FOMC is voting on symbolic “rate hikes” as if any day now the unemployment rate as it is stated will suddenly switch over to relevant.

But it’s not just the denominator that’s the problem with the ratio. The top of the fraction has been growing faster than the bottom, to be sure, producing its quickening downward trajectory, but that doesn’t necessarily mean it has been growing fast. It hasn’t. The result is wage growth that remains suspiciously subdued for the fourth year in a row.

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