Unemployment Statistics Explained, Sort Of

We hear a lot about unemployment, but from where do those figures come? It would seem that they would be based on number of folks on unemployment compensation. According to the United States Bureau of Labor Statistics, that is not the case. The numbers are determined by, are you ready for this, a government survey.

Sixty thousand households are polled each month, which means about 110,000 individuals are surveyed. None are polled for more than four consecutive months, then not sampled again for eight months, after which they are put back in the system for another four months. The selection of who gets called is made by the federal government, which also interprets the results, in an effort to determine how many people are working are working and how many aren't. According to the government, "the possible error resulting from the sampling is not large enough to distort the total unemployment picture."

The categories are pretty straight forward:
People with jobs are employed.
People without jobs are looking for a job, and are available for work are unemployed.
People who are not employed or unemployed are not in the labor force.

Some people aren't counted no matter what. Those in prison, nursing homes or mental institutions, and members of the armed forces, are eliminated, as are those 15 years old and younger.

Okay. So who's considered employed? Anybody who, during the survey week, worked at all, no matter how long, or short, for pay or profit, is employed. The boy across the street cut my lawn for a couple of dollars. He's employed. So are people who have jobs but didn't work during the survey week because they were on vacation, sick, have child care problems, maternity or paternity leave, out on strike, or didn't work because of bad weather. It doesn't matter if they were paid or not, they're still considered employed. If your husband has a business and you help out during the week, you're employed even if you don't get paid.

Who is unemployed? If you don't have a job, but have looked for one in the past four weeks and are available to work, you're unemployed. Looking for a job, in this case, means you have contacted an employer or had a job interview, have been in touch with an employment agency, have talked to friends or relatives, been to a school or university employment center, are sending out resumes or filling out applications, placing or answering advertisements, checking with union or professional registers, or contacted some other means of job placement. If you are on a temporary layoff, but expect to be recalled, you are unemployed whether or not you have been looking for another job.

Then there are people not in the labor force. These folks fit into one of two categories. The first is termed "marginally attached to the labor force". They haven't looked for a job in the past four weeks. Some are going to school, retired, or have "family responsibilities" which keep them from working. They are jobless, are not currently looking for work, but have, in the last 12 months, looked for, or held, a job. They must be available for work to be termed marginally attached.

The second category for people not in the labor force, are called "Discouraged Workers." A discouraged worker is one who is not currently looking for work because: 1) they believe there is no job available in their line of work; 2) they have not been able to find work; 3) they lack the needed skills or experience; and, 4) employers feel they are too young, too old, or turn them down because of some type of discrimination.

Oops. Almost forgot about "seasonal fluctuations." The building trades, for example, tend to taper off during the winter months, as do the needs for ground keepers. This happens every year, so government numbers crunchers don't count them in the survey. I guess the logic is that unemployment change can't be determined as folks who are unemployed due to seasonal conditions aren't a factor to overall unemployment, even if they aren't working.

That being said, where does the government go to make these surveys? There are 7,300 areas the government uses, collectively called Local Area Unemployment Statistics (LAUS), to gather figures. These areas are Census Regions and Divisions, States, Metropolitan Statistical Areas and Metropolitan NECTAs (New England City and Town areas), Metropolitan Divisions and NECTAs, Metropolitan Statistical Areas and Metropolitan NECTAs, Combined Metropolitan Statistical Areas and Combined NECTAs, Small Labor Market Areas, Counties and county equivalents, Cities of 25,000 population and more, Cities and towns in New England regardless of population. Seems to rely heavily on New England.

What about unemployment insurance? The Bureau of Labor Statistics does not use those figures, which are maintained by the Employment and Training Agency of the U.S. Department of Labor, for a number of reasons. The numbers of those on unemployment insurance exclude unemployed workers who have used up their benefits, those who have not been employed long enough to have earned unemployment benefits, those who have lost jobs because of their own actions such as being fired for misconduct, and others who do not file for benefits.

So, how are unemployment numbers finally determined? Through number crunchers and bean counters. How accurate are they? Only as good as the counters are. Do they give an indication of the employment situation in the country? Probably. But with the experience we have had of late with projections coming from the capitol, the old adage of figures never lie but liars figure, might cause some concern.