Fox's Varney Imagines A Quarter Million Dropped From Labor Force

Blog ››› ››› ALBERT KLEINE

Fox Business host Stuart Varney vastly exaggerated the number of people who dropped out of the labor force in July, revealing the veteran business reporter's fundamental misunderstanding of unemployment statistics.

On August 2, the Bureau of Labor Statistics released its monthly employment situation summary for July. The report showed non-farm payroll employment increase by 162,000 and the unemployment rate dropping from 7.6 to 7.4 percent.

Reacting to the report on Fox News' America's Newsroom, Varney quickly cast doubt on the declining unemployment rate, claiming that it was mainly due to people dropping out of the labor force. He claimed that the rate drop was due to the fact that "240,000 people dropped out of the workforce, they just quit trying. That is how the unemployment rate came down to 7.4 percent, a quarter million people just dropped out."

Varney continued to claim that 240,000 people dropped out of the workforce on his Fox Business show, Varney & Co.

Fox News

But Varney, a veteran business reporter and Fox's go-to source for parsing out economic statistics, is completely misreading the report.

The statistic that Varney cites is the number of people the BLS defines as "Not in the labor force." While the number did increase by 240,000 in the month of July, this is not solely due to people dropping out of the workforce. According to the Bureau of Labor Statistics, those "[n]ot in the labor force":

Includes persons aged 16 years and older in the civilian noninstitutional population who are neither employed nor unemployed in accordance with the definitions contained in this glossary.

The statistic includes people who are out of the labor force for any reason -- including stay-at-home spouses, retirees, and other members of the non-institutional population that would not be typically looking for work. An additional 240,000 people in this category is not out of the norm -- additions met and exceeded this month's figure multiple times throughout the 2000s.

Furthermore, the long-term trend in the number of those not in the labor force has been rising steadily for decades, most likely due to population growth, with little to no sign of acceleration in recent years:


Claiming that this number went up solely due to labor force dropouts is flat-out wrong. The more accurate way to gauge labor force dropouts is to look at the change of the "Civilian labor force." And while July saw a net loss of 37,000, the number is about one-sixth the amount cited by Varney.

Furthermore, economist Peter Newland claimed that the report, while weaker than expected, should not be overstated. According to NPR:

Barclays Capital economist Peter Newland called it "a clearly weaker-than-expected report," The Associated Press reports. He adds: "But one should not overstate it -- the unemployment rate continues to trend down and average job growth of 175,000 will be more than enough to continue to push it lower."

This month's report mainly showed tepid improvement for the labor market, not a mass exodus of workers. Of course, economists have repeatedly argued for increased spending to spur employment gains, only to be met with opposition from the likes of Fox News

Posted In
Economy, Jobs, Wages, & Unemployment
Fox News Channel
Stuart Varney
America's Newsroom
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