What's with the unemployment rate?

So, if I didn't know any better and someone told me that the unemployment rate was 8.2 percent, I'd think that 8.2 percent of the working age population was out of work.  Of course, there are so many "factors" that go into calculating this rate, that it basically renders it a meaningless number.  Here's some real numbers from the Dept. of Labor:

Total working age population: 243 million
Total employed: 142 million
Unemployed: 12 million
Not in labor force: 88 million

So, where does this 8.2% number come from?  If you take the total number of "unemployed" and divide it by the working age population, then you should have a rate of about 5%.  But no, we have to divide that 12 million by the number of people "participating" in the labor force.  This is how they get the 8%.  By ignoring about 88 million people.  Sure, some of these legitimately do not work in the labor force and so one could argue should not count, such as stay at home moms.  According to census data, there are 85 million mothers in the U.S., so even if they all stayed home (we know they don't), that still doesn't account for all 88 million folks.

This brings us to how they really get the rate.  They do it through a number they call the "participation rate".  The overall participation rate is 64%.  Doesn't this mean that 37% of the people don't have a job?  Yes...yes it does, but they do have to remove stay at home moms from the equation.  After all, it makes up a good chunk of people...right?  Men's participate rate is at 73% while women's participate rate is at 58%.  So, that surely reflects stay at home moms, but doesn't account for all 88 million folks.  In fact, it doesn't even accurately reflect stay at home moms.  Census data again shows that 5 million women are stay at home moms.  Therefore, that lowers the total participation rate down to 83 million since I legitimately would conclude you can't count stay at home moms in this number.

That brings us to the Civilian non-institutional population.  This is where the total working age population is derived.  It encompasses everyone in the U.S. who are 16 and up, are not in an institution and are not in the U.S. military.  So, that's where the total number comes from.  Which brings us back to the "participating" number again.  That number is 155 million people.  As far as I can tell, it is a completely made up number.  However, apparently it does have a meaning.  Here is the definition from Barron's Business Dictionary.

"All members of the population aged 16 or over in the United States who are not in the military or institutions such as prisons or mental hospitals and who are either employed or are unemployed and actively seeking and available for work. Every month the U.S. Department of Labor releases the unemployment rate, which is the percentage of the civilian labor force that is unemployed. In very bad economic times, the unemployment rate can be deceptive because it does not consider discouraged workers, those who are unemployed but have stopped actively seeking employment."

So, in other words, this 155 million number that they use to calculate unemployment doesn't include people who are "not actively seeking" employment.  Alrighty then.  So, it is pretty much a made up number.  Sure, this includes stay at home moms, self employed individuals and other groups, but we've already established that stay at home moms only constitute 5 million of the 88.  In 2009, the number of self employed persons was counted at being just over 15 million.  So there, we can remove another 15 million which brings the total down to about 68 million people.  Then there is the "official unemployed" number which is about 13 million so that brings it down to about 55 million.  So...just who are these 55 million people.  They don't work out of the home, they aren't farm laborers (that's an entirely different story), and they aren't self-employed.  Therefore, since I'm guessing these people either don't want to work or have given up trying to find work, that they are "undercounted".  Of course, it is in the best interests of a politician to tell you when people are undercounted in voting, but never in employment, so you won't hear about them much, if at all.  Does this mean that the actual unemployment rate should be somewhere closer to 26%?  Maybe, maybe not, but that is certainly the number of people currently not working.