Unemployment Rate

Sen. Bernie Sanders website states, “The real unemployment rate is much higher than the “official” figure typically reported in the newspapers. When you include workers who have given up looking for jobs, or those who are working part time when they want to work full time, the real number is much higher than official figures would suggest.”  He has stated the same, including that 10.5% is the actual unemployment rate, in speeches:

The interesting part of his statement, and the part that stuck with me, was that “when you include workers who have given up looking for jobs”.  It left me with the question of just who is included in the September 2015 5.1%  unemployment rate?  For years I thought that the unemployment rate was based on those collecting unemployment insurance.  So I did some research and found out I was wrong.  I also found things I hadn’t ever heard on the nightly news when it comes to discussing unemployment in the U.S.

The Bureau of Labor Statistics (BLS) uses two different surveys to trend employment levels in the US.  The first is the Current Population Survey (CPS) and the other is the Current Employment Statistics (CES) Survey.  The CPS surveys households while the CES surveys payroll (companies) or establishments.

The BLS  has used the CPS since 1940.  It is a survey of 60,000 eligible households that are given the survey every month in the US.  The 60,000 households translates into “110,000 individuals.”  Approximately 75% of the households sampled remain the same from month to month and 50% remaining the same from year to year.  The survey takes into account anyone age 16 and over; excludes anyone living in an institution and those on active duty in the Armed Forces, and is seasonally adjusted.

When it comes to surveys I tend to calculate the total percentage out of a total population being surveyed.  I did that for this as well.  From the US Census website:

  • The total number of households in the US (2009-2013) is 115,610,216;
  • In 2010 243,275,505 were age 16 and older in the US.
  • The total population 2014 estimate being 318,857,056.

The BLS survey is therefore only contacting 0.0005% of US households, 0.0004% of those aged 16 and older, and 0.0003% of the total US Population.  Granted those percentages do not take out the number of households or individuals in the Armed Services.  However it still gives a picture of how few households are being asked about their employment status in the U.S.  For a comparison the BLS site points out that opinion surveys usually only ask less than 2,000 people.  They also point out that it is cost and time prohibitive to include the entire population in their survey.

After the BLS gets the data, “the survey responses are “weighted,” or adjusted to independent population estimates from the Census Bureau.  The weighting takes into account the age, sex, race, Hispanic ethnicity, and state of residence of the person, so that these characteristics are reflected in the proper proportions in the final estimate.”

So who is considered employed during a survey week?  According to the BLS employed individuals are:

  • All those age 16 and older who did any work for pay or profit during the survey reference week.  This includes all part-time, temporary work, regular full-time, and year-round employment.  For example:
    • Sarah works three days of the survey week.  She is fired on the fourth day and the survey happened on the fifth.  She is considered employed because she worked for three days that week.
    • Jim, who has no other employment, watches his neighbors pet while they are on vacation and is paid $20.  Jim is considered employed.  To clarify this example the specific definition only states that the person worked any time at all for pay.  So Jim could have worked an hour and got $20 pay and been considered employed.
  • All those age 16 and older who did 15 hours or more of unpaid work in a business or farm operated by a family member with whom they live during the survey reference week.  For example:
    • A 16 year old girl helps out on the family farm doing regular chores for 15 hours or more a week.  She would be considered employed.
    • A spouse that helps out with the family business for 15 hours a week unpaid.  The spouse would be considered employed.
  • All those age 16 and older temporarily absent from their regular jobs.  For example:
    • Temporarily ill
    • Vacation
    • Family leave
    • On strike
    • Bad weather

Of course anyone considered employed is not included in the percentage of unemployed Americans.  Just who is counted as unemployed?  According to the BLS unemployed people are those 16 and older:

  • who didn’t have any job during the survey reference week; were available to work (unless temporarily ill) and made at least one specific active effort to find a job in the prior 4 weeks.  The active method of job hunting has to have the ability to connect the job seeker with an employer; for example submitting resumes, going to a job fair, employment center, etc.
  • Anyone not working and are waiting to be called back to a job from which they were laid off.

Anyone who does not fit into those two categories is considered to not be in the labor force.  For example a woman who is out of work, not looking for work, yet stays home and is the primary care giver of her elderly father.  Both the woman and her father would be considered to be not in the work force.  Those considered to be not in the labor force (marginally attached) are not included in the Unemployment Rate.  Also not included are discourage workers who are those not looking for work yet unemployed.  If a man is fired from his job and gives up looking for work, or goes back to school for retraining, he is not included in the unemployment rate.

To summarize the BLS considers those employed within the last survey reference week to have jobs, unemployed people are those without a job in the survey reference week and are actively looking for one over the four weeks prior, and everyone else is considered to not be in the labor force.  The Unemployment Rate is “the number of  unemployed people as a percentage of the labor force.”  The labor force being the combined total of employed and unemployed people.

Where does Sen. Bernie Sanders get the 10% unemployment rate?  One place that number shows up is in the Alternative Measures to Unemployment figure that the BLS does calculate.  That number percentage is the “total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force” or the “U-6” percentage.  As of September 2015 that number is 10%.

The Current Employment Statistics (CES) is a survey of “approximately 143,000 businesses and government agencies, representing approximately 588,000 individual work sites.”  The survey is voluntary for businesses to complete with the exception of North Carolina, South Carolina, Oregon and Washington state where it is required by state law to be filled out.  The survey estimates the number of employees on nonfarm payrolls, average hourly earnings, average weekly earnings, and average weekly hours.  This survey excludes those who are self employed.  It also does not separate part time from full time employment.  Since this survey is also of a specific establishment if a person works for multiple establishments doing multiple jobs they are counted once at each company they work for.  For example Sally works at the grocery store and the book store during the surveyed time period; both stores are selected to be part of the CES.  According to the survey two jobs are filled by two people.  However if Sally at the grocery store had two jobs she did (check-out and the shoe department) she would only be counted in the survey once.

As you can see the unemployment rate and current employment statistics are a bit more complicated than the media reports.

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7 thoughts on “Unemployment Rate

  1. Roseylinn, thanks for the illumination. While unemployment is down and private sector jobs have grown for the last 67 consecutive months, we are underemployed. Meaning many are working part-time jobs or are independent contractors. This is where we need some investment in our infrastructure, community colleges and innovative industries that re growing. Good post, Keith

    Liked by 1 person

    • Thanks for the comment. I agree that we need to have more full time good paying jobs. Investment and education are ways to get there. So is increasing the incomes to the middle class. Without a middle class and consumers with enough money to purchase items there won’t be jobs for people to create the items.

      In my research I came across this interview with Jim Clifton the CEO and Chairman of Gallup. I almost included it but the post was long enough as it is. It speaks to the “unemployment is down and private sector jobs have grown” point in your comment: https://www.youtube.com/watch?v=CTRAibMiLZ8

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  2. Don’t forget the 10,000 people a day who “retire” and take the lowest Social Security payment because they’ve given up on finding work. Some employers think 62 is too old. Instead, some of us turn to lucrative fields like writing.

    Thanks for liking my blogs—I like yours too.

    Liked by 1 person

    • Good point. The saddest part about this is that because the official unemployment rate is so low, and job growth is so great unemployment for those of all ages and education levels isn’t seen to be an issue. Some employers look for any reason to not hire someone.

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      • True, but I have 2 entrepreneurial sons with small fluctuating businesses. Increasingly onerous and unpredictable government mandates impose costs on them and have them nervous about what’s coming next. They’re leery about hiring because they don’t want to fire.

        Liked by 1 person

        • Small businesses get caught in a cross fire of regulations and rules. Some of the regulations like safe working conditions, definition of an employee, and living wages I agree with. Some of them look great on paper and in theory while in practice have unintended disastrous consequences. I don’t blame them for not wanting to fire someone.

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