Much positive economic hay has been made of the job report numbers that were released last week. The number on which everyone focuses is the unemployment rate, which touched a six-year low of 5.9% in September. According to the Bureau of Labor Statistics (BLS), 248,000 jobs were created.

But much of the financial media ignores the other side of the picture. Most importantly, the latest data from the BLS that shows the labor force participation rate at its lowest since 1978 – a disturbing 62.7%! The labor force participation rate refers to people who are currently employed or are actively searching for work. The chart below makes it blindingly obvious that the economy is not on the steady growth track the government would like us to believe.

How can the economy be improving when fewer and fewer people are actually participating in it? And why are the jobs numbers and unemployment rates so “good,” when the participation rate is so low? As Peter Schiff argues, the jobs that are being created are low-paying, part-time work. It’s likely that every 2 part-time jobs added to the economy are being taken on by just a single individual. So when the BLS reports that more than 200,000 jobs have been created, that does not mean that the same number of people have been put to work with jobs that can sustain a family.

Not only that, but the majority of these jobs are in the service and food industries. Even Bloomberg acknowledges this to be the case in its most recent reporting, yet it still spins these low-paying jobs as a positive indicator and not as a sign of a stagnant economy. Of course, Bloomberg completely ignores the labor force participation rate.

Don’t buy the hype from the Federal Reserve and the financial media. Many people instinctively know that the media has it wrong, because they’ve been watching their cost of living rise for years. If you are fortunate enough to be employed, you probably have children or relatives who are not, or wish they could get a better job. Trust your instincts and prepare for the future.

Peter has more to say on the September jobs numbers in the video below. Some highlights are quoted underneath the video.

Why is the labor force shrinking if the economy is so good? And if the economy is so good, why are average hourly earnings not rising? Yes, we are creating more than 200,000 jobs, but you have to understand why, and I think there are two dynamics at play. One is the transformation of the workforce from full-time to part-time employment. As companies shed full-time workers and replace them with part-time workers, they generally need more part-time workers to make up for the hours that have been lost… 

If you’re an employee who has lost a full-time job, there’s a pretty good chance that you may end up replacing it with two part-time jobs. So you used to have one job, now you have two. All of these extra jobs count as jobs. The jobs report doesn’t distinguish between full- and part-time. If they create 200,000 jobs, it doesn’t matter to the report if they’re full- or part-time jobs.

[If you look at] all the jobs that have been created so far in 2014, the vast majority of the jobs are low-paying jobs. Many are temporary jobs. Many are part-time jobs. They’re in service sector, they’re in hospitality, leisure, retail trade. 

I believe that the collective irrational exuberance, the collective lack of understanding of the true nature and character of the US economy and the financial markets is greater now than anything I experienced [before the ’07-’08 crisis].”