How the U.S. measures employment & unemployment
By Lee Russ
Sunday, January 08, 2006 at 04:00 PM
Ever wonder where those magic statistics come from when the people on television somberly announce that "unemployment in the U.S. fell to 5 percent last month, while there was a slight rise in the total number of people employed"????
Well, they come from the Bureau of Labor Statistics (BLS). And the way they are compiled/computed seems to come as a shock to most Americans. The statistics aren't based on the number of people collecting unemployment benefits, and they aren't based on an actual national tally of all American households.
They are derived from a statistical sampling survey conducted by the Dept. of Labor, using methods and definitions that are described in a BLS pamphlet titled How the Government Measures Unemployment".
Here's some useful info excerpted from that publication. It's a bit lengthy, but definitely worth reading if you want to understand why the official government statistics are so much rosier than what you see when you look around. I've boldfaced some of the more interesting info if you just want to scan looking for the boldfacing.
In particular, think about (1) who might get omitted from the survey due to frequent changes of address, lack of telephone, etc., (2) the definition of "employed", and (3) how many people are omitted from the computation altogether because they are in jail or prison.
...the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940 when it began as a Work Projects Administration project. It has been expanded and modified several times since then. As explained later, the CPS estimates, beginning in 1994, reflect the results of a major redesign of the survey.There are about 60,000 households in the sample for this survey. The sample is selected so as to be representative of the entire population of the United States. In order to select the sample, first, the 3,141 counties and county-equivalent cities in the country are grouped into 1,973 geographic areas. The Bureau of the Census then designs and selects a sample consisting of 754 of these geographic areas to represent each State and the District of Columbia. The sample is a State-based design and reflects urban and rural areas, different types of industrial and farming areas, and the major geographic divisions of each State.
Each of the 754 areas in the sample is subdivided into enumeration districts of about 300 households. The enumeration districts, in turn, are divided into smaller clusters of about four dwelling units each, through the use of address lists, detailed maps, and other sources. Then, the clusters to be surveyed are chosen statistically, and the households in these clusters are interviewed.
Every month, one-fourth of the households in the sample are changed, so that no household is interviewed more than 4 consecutive months. This practice avoids placing too heavy a burden on the households selected for the sample. After a household is interviewed for 4 consecutive months, it leaves the sample for 8 months and then is again interviewed for the same 4 calendar months a year later, before leaving the sample for good. This procedure results in approximately 75 percent of the sample remaining the same from month to month and 50 percent from year to year.
Each month, 1,500 highly trained and experienced Census Bureau employees interview persons in the 60,000 sample households for information on the labor force activities (jobholding and jobseeking) or non-labor force status of the members of these households during the week that includes the 12th of the month (the reference week). This information, relating to all household members 16 years of age and over, is entered by the interviewers into laptop computers; at the end of each day's interviewing, the data collected are transmitted to the Census Bureau's central computer in Washington, D.C. In addition, a portion of the sample is interviewed by phone through two central data collection facilities. (Prior to 1994, the interviews were conducted using a paper questionnaire which had to be mailed in by the interviewers each month.)
Each person is classified according to the activities he/she engaged in during the reference week. Then, the total numbers are "weighted," or adjusted to independent population estimates (based on updated decennial census results). The weighting takes into account the age, sex, race, Hispanic origin, and State of residence of the population, so that these characteristics are reflected in the proper proportions in the final estimates.
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Respondents are never asked specifically if they are unemployed, nor are they given an opportunity to decide their own labor force status. Unless they already know how the Government defines unemployment, many of them may not be sure of their actual classification when the interview is completed.
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What are the basic concepts of employment and unemployment?
The basic concepts involved in identifying the employed and unemployed are quite simple:
People with jobs are employed.
People who are jobless, looking for jobs, and available for work are unemployed.
People who are neither employed nor unemployed are not in the labor force.
The survey is designed so that each person age 16 and over who is not in an institution such as a prison or mental hospital or on active duty in the Armed Forces is counted and classified in only one group. The sum of the employed and the unemployed constitutes the civilian labor force. Persons not in the labor force combined with those in the civilian labor force constitute the civilian noninstitutional population 16 years of age and over.
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For example:
Elizabeth Lloyd reported to the interviewer that last week she worked 40 hours as a sales manager for the Western Beverage Company.
Steve Hogan lost his job when the local plant of the Chariot Aircraft Manufacturing Company was closed down. Since then, he has been visiting the personnel offices of the other factories in the town trying to find a job.
Linda Coleman is a homemaker. Last week, she was occupied with her normal household chores. She neither held a job nor looked for a job. Her 80-year old father who lives with her has not worked or looked for work because of a disability.
Each of these examples is clear cut. Elizabeth is employed; Steve is unemployed; and Linda and her father are not in the labor force.
Who is counted as employed?
Not all of the wide range of job situations in the American economy fit neatly into a given category. For example, people are considered employed if they did any work at all for pay or profit during the survey week. This includes all part-time and temporary work, as well as regular full-time year-round employment. Persons also are counted as employed if they have a job at which they did not work during the survey week because they were:
On vacation;
Ill;
Experiencing child-care problems;
Taking care of some other family or personal obligation;
On maternity or paternity leave;
Involved in an industrial dispute; or
Prevented from working by bad weather.
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But what about the two following cases?
George Lewis is 16 years old, and he has no job from which he receives any pay or profit. However, George does help with the regular chores around his father's farm about 20 hours each week.
Lisa Fox spends most of her time taking care of her home and children, but, all day Friday and Saturday, she helps in her husband's computer software store.
Under the Government's definition of employment, both George and Lisa are considered employed. They fall into a group called "unpaid family workers," which includes any person who worked 15 hours or more in a week without pay in a family-operated enterprise. Such persons contribute significantly to our productive effort and are an important part of our labor supply, particularly in agriculture and retail trade. However, unpaid family workers who work fewer than 15 hours per week are counted as "not in the labor force."
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Who is counted as unemployed?
Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:
Contacting:
--An employer directly or having a job interview;
--A public or private employment agency;
--Friends or relatives;
--A school or university employment center;
Sending out resumes or filling out applications;
Placing or answering advertisements;
Checking union or professional registers; or
Some other means of active job search.
Passive methods of job search do not result in jobseekers actually contacting potential employers, and therefore are not acceptable for classifying persons as unemployed. These would include such things as attending a job training program or course or merely reading the want ads.
Workers expecting to be recalled from layoff are counted as unemployed, whether or not they have engaged in a specific jobseeking activity. But, in all other cases, the individual must be actively engaged in some job search activity and available for work (except for temporary illness).
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Who is not in the labor force?
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A series of questions is asked each month of persons not in the labor force to obtain information about their desire for work, the reasons why they had not looked for work in the last 4 weeks, their prior job search, and their availability for work. These questions include: 1. Do you currently want a job, either full or part time?
- What is the main reason you were not looking for work during the LAST 4 WEEKS?
- Did you look for work at any time during the last 12 months?
- LAST WEEK, could you have started a job if one had been offered?
"Discouraged workers" are a subset of the marginally attached. "Discouraged workers" report they are not currently looking for work for at least one of 4 reasons:
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For more information
For labor force statistics from the CPS or inquiries regarding the concepts and definitions described in this report, contact the Division of Labor Force Statistics at the Bureau of Labor Statistics (e-mail address: cpsinfo@bls.gov). CPS data can be found on the Internet at cps
U.S. Bureau of Labor Statistics
Division of Labor Force Statistics
Suite 4675
2 Massachusetts Avenue, NE
Washington, DC 20212-0001
URL: http://www.bls.gov/CPS
Phone: (202) 691-6378
CPS data questions: cpsinfo@bls.gov
Technical (web) questions: webmaster@bls.gov
Other comments: feedback@bls.gov