On Friday, Dec. 2, the government surprised Wall Street and most Americans by reporting that the U.S. unemployment rate fell to 8.6% in November on a seasonally adjusted basis, from 9.0% in October. Unfortunately, this is more a sign of how bad the job market is right now than an indication that job conditions are improving.
On Thursday, Gallup reported that its not-seasonally adjusted unemployment measure was 8.5% for November -- not much different from Gallup's 8.4% and the government's 8.5% not-adjusted rates of October. However, the government's not-adjusted measure fell to 8.2% in November.
Of course, some people are always leaving the workforce as they retire, lose their job, or just get discouraged. However, the large number of Americans dropping out of the workforce last month likely also reflects the severely depressed job market conditions of the past three years.
Most importantly, reducing the unemployment rate by driving potential employees out of the workforce is not a solution to today's job problem or a good sign for the U.S. economy. Instead, Friday's unemployment report is another sign of how bad job-market conditions have been for far too long.