Silver lining of 4.05% unemployment

THE Labor Department reported Friday that the nation’s unemployment rate rose by 0.2 of a percentage point in June, to 4 percent.

That was a surprise, since most experts were expecting a nice decline.

Even more surprising is this: If you do the math, the jobless rate actually rose by 0.3 of a percentage point — from 3.75 percent in May to 4.05 percent in June. The magic of rounding off decimal points (from 3.75 percent in May up to 3.8 percent; and from 4.05 percent in June down to 4.0 percent) made the increase in the jobless rate look smaller than it actually was. Here’s the last surprise. Whether the unemployment rate jumped by 0.2 of a percentage point or 0.3, both were good signs for the economy. Huh? How could an increase in the jobless rate be good news?

Because it means that more people are starting to look for jobs. And that, in turn, means that more people are optimistic about finding work.

Let me go back to the basics of what I’ve explained for years.

The way Washington calculates the unemployment rate is a little odd, to say the least. If someone tells the Labor Department surveyors that they have stopped looking for work, the government doesn’t count them as unemployed.

That may seem bizarre on a number of levels — the person might have stopped looking because she feels her search is hopeless, or because he no longer wants a job.

But the first explanation seems more likely because most people need to earn a living. These people ultimately are classified as discouraged workers, who first fall down into a subset of the unemployment statistics (where the unemployment rate is now 7.8 percent in June compared with 7.6 percent in May) until they ultimately disappear completely from the workforce.

Now back to the number you are seeing in Saturday’s headline — the 4 percent unemployment rate.

That’s the result of the civilian workforce rising by 601,000 peo- ple, of whom 499,000 were unemployed.

Think about it. Suddenly, because they feel confident that a job may exist for them, 601,000 people got off the couch and looked for work.

Of those, 499,000 couldn’t find work, but they did show up in the government’s survey as searching for a job. So they helped raise the unemployment rate. Good for them!

Even nicer, another 37,000 new jobs were added to April and May.

But wage growth is still weak — an increase of just 5 cents an hour in June.

Still, if the additional jobs and that sort of wage growth don’t make you smile, the rising unemployment rate should.