Is the low 5% unemployment number recently announced a cause for celebration? Or should those who are interested in the economic health of the country look to other numbers?

In judging the health of the economy, we should realize that the published unemployment number may not be the most important number to look at. It does not include people who have dropped off the government's "unemployment" roles or who have simply given up. When counting these people, the real unemployment rate, according to the Bureau of Labor Statistics, is closer to 10%

The accurate way to measure true unemployment is through the labor participation rate, which is the percentage of people in the work force who actually have jobs. This is near its lowest level for the past 40 years.

The unemployment numbers are also distorted by what is counted as an "employed" person. Today, so many jobs are part-time or seasonal, so that the jobs added each month do not necessarily represent full-time or permanent jobs complete with employee benefits or job security. The overall problem has been growing each year over four decades, so counting the number of new jobs added each month is really meaningless in the bigger scheme of things.

So the question of whether a good jobs report helps the economy should be rephrased: Does a positive job report each month add to the illusion of an improving economy? A follow-up question should be, how can we finally fix the declining participation rate and create true economic health?

At some point, the economic aspects of Wall Street will catch up with the reality -- a continuing decline in manufacturing, outsourcing of jobs, and companies moving offshore to avoid high corporate taxes. 

It's not the headline unemployment rate that tells the story, but the labor participation rate.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Besides blogging at TheStreet.com, Michael Thomsett also blogs at the CBOE Options Hub and several other sites. He is author of 11 options books and has been trading options for 35 years.  Thomsett Publishing Website