People who are not employed but not looking for employment are not considered unemployed and are not included in calculating the unemployment rate.
I’ve theorized that one reason for the artificially low unemployment rate is people dropping out of the workforce, although I couldn’t explain why so many people were dropping out of the workforce.
But now I think I can explain it.
The Committee to Unleash Prosperity, an economist-founded nonprofit, analyzed how unemployment benefits and ObamaCare subsidies in each state stacked up against employed people’s compensation. The writers of the report found that these two benefits alone could total up to $120,000 per year for a family of four.
In 14 states — including North Dakota, Oregon, Colorado, Montana, and Minnesota — unemployment benefits and ObamaCare subsidies were found to be the equivalent to a head of household earning $80,000 in salary.
In other words, a spouse would have to earn more than $80,000 a year from a 40-hour a week job to have the same after-tax income as certain families with two unemployed spouses receiving government benefits.
The three states with the largest benefits were Washington, at nearly $123,000; Massachusetts at $117,000; and New Jersey at nearly $109,000 for the year.
This would affect different people in different ways. If you’re one of the software engineers recently let go at Facebook, the prospect of making $80,000 for not working is probably not appealing, but there are a lot of jobs where that would not apply.
For example, when I go to a restaurant or a convenience store, most of them have Help Wanted signs posted, and if I had a choice between washing dishes for whatever a dishwasher gets paid vs. getting paid $80,000 to not wash dishes, I’m taking the $80,000, dropping out of the workforce, and I would not be considered unemployed.