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Demystifying Unemployment Statistics

About Unemployment Figures

References to the federal government’s unemployment statistics can be somewhat mystifying.  Press accounts commonly refer to the “official unemployment rate” and to something called U-6, the “broadest measure of unemployment.”  An understanding of how the government gathers and organizes the information is necessary before we can draw conclusions from the reported figures. [i]

How the data are obtained                                                               

The federal government collects and reports information regarding labor market conditions through the Current Population Survey.  Introduced in 1940, it is conducted by the Census Bureau and compiled and published by the Bureau of Labor Statistics.  The Survey is conducted once a month, via an interview using a questionnaire that elicits information regarding individuals’ status during a “reference week” during the month; the employment status of individuals is determined solely by their work-related and job search activities during the reference week and related periods. [ii] 

Major groupings

The Survey excludes people under age sixteen, people living in institutions (for example, a correctional institution or a residential nursing or mental health care facility) and those on active duty in the Armed Forces.  The resulting survey population is known as the civilian non-institutional population 16 years and over.  [See Figure below.]

 

[i] The following discussion includes information and excerpts from the Bureau of Labor Statistics publication, How the Government Measures Unemployment, posted at http://www.bls.gov/cps/cps_htgm.htm.

 

[ii] In 1994, the CPS introduced a redesigned questionnaire and modernized data collection system with the goal of obtaining more accurate and complete information on the labor force activities of the population.  Some statistics regarding people who are not working date only from that time.

 

The survey population is divided into two groups:  the civilian labor force, consisting of the sum of the employed and the unemployed (as defined); and all others, categorized as people not in the labor force.

The BLS definition of employed consists of --

  • All those who did any work for pay or profit during the survey reference week or did at least 15 hours of unpaid work in a business or farm operated by a family member with whom they live, and

  • All those who were temporarily absent from their regular jobs, whether they were paid or not, because they were on vacation, ill, involved in a labor dispute, prevented from working by bad weather, experiencing child care problems, on maternity or paternity leave, or taking care of some other family or personal obligation, whether or not they were paid for the time off.

    The employed are divided into groups:  “full-time” [Category 1] and “part-time:”  Full-time is defined as working 35 or more hours a week; part-time is defined as working 1 to 34 hours a week. 

    Individuals who work part-time are divided into those who are voluntarily working part-time [Category 2], and those who want and are available for full-time work but have had to settle for a part-time schedule [Category 3]. This latter group are referred to as persons employed part time for economic reasons (also known as involuntary part-time workers).

    The unemployed [Category 4] are:

  • All those who did not have a job at all during the survey reference week, made at least one specific active effort to find a job during the four weeks preceding the interview, and were available for work (unless temporarily ill), and

  • All those who were not working and were waiting to be called back to a job from which they had been laid off. (They need not be looking for work to be classified as unemployed.)

    Actively looking for work may consist of any of the following activities:

  • < >An employer directly or having a job interview
  • A public or private employment agency
  • Friends or relatives
  • A school or university employment center
  • Submitting resumes or filling out applications

  • Placing or answering job advertisements

  • Checking union or professional registers

  • Some other means of active job search

    Passive methods of job search do not have the potential to connect job seekers with potential employers and therefore do not qualify as active job search methods. Examples of passive methods include attending a job training program or course, or merely reading about job openings that are posted in newspapers or on the Internet.

    Categories “Not in the Labor Force”

    The government also collects data regarding a number of categories of individuals who do not fall within the definitions of employed or unemployed, and thus are “not in the labor force”.

    The first two categories are referred to as individuals who are marginally attached to the labor force.  These individuals are not currently looking for work; i.e., they did not engage in an active job search activity during the four weeks preceding the interview (and so do not fall within the definition of unemployed”; however they did actively look for work during the 12 months preceding the interview (or since they last worked if they worked within the last 12 months), and are available for work and want a job now.   

    Within the “marginally attached” is the category of discouraged workers [Category 5], who report they are not currently looking for work for one of the following reasons:

  • They believe no job is available to them in their line of work or area.

  • They had previously been unable to find work.

  • They lack the necessary schooling, training, skills, or experience.

  • Employers think they are too young or too old, or

  • They face some other type of discrimination.

    The second category of the “marginally attached” [Category 6] consists of those who were not currently looking for work for reasons other than discouragement, for such reasons as school or family responsibilities, ill health, and transportation problems.

    In addition to the “marginally attached” is a category consisting of those who are not currently looking for work and did actively look for work during the 12 months preceding the interview (or since they last worked if they worked within the last 12 months), but were not available for work at the time of the interview and want a job. [Category 7.]

    There also is a category of individuals want a job and are available for work, but who did not look for work during the 12 months preceding the interview [Category 8].

    Finally, there is a category of individuals who are not working and do not want to have a job [Category 9], because they are retired, or are going to school or have family responsibilities, or for other reasons. 

    Summary of Categories

    In sum, then, the government gathers statistics regarding the following categories, presented in a declining order of attachment to the labor force [please refer to Figure _]:

  • Employed full-time

  • Employed part-time voluntarily

  • Employed part-time involuntarily (“for economic reasons”)

  • < > (or were waiting to be called back to a job from which they had been laid off).

    “Discouraged workers”:Do not have a job and are available for work and actively looked for work in the last twelve months (or since they last worked if they worked within the last 12 months), but did not actively look for work in the last four weeks because they were discouraged. 

  • Others “marginally attached to the labor force”:Do not have a job and are available for work and actively looked for work in the last twelve months (or since they last worked if they worked within the last 12 months), but did not actively look for work in the last four weeks for reasons other than discouragement.

  • Looked during last year but not available for work: Do not have a job and actively looked for work in the last twelve months (or since they last worked if they worked within the last 12 months), but did not actively look for work in the last four weeks and are not currently available for work.

  • Want a job and are available for work, but did not actively look for work during the last year.

  • Are not employed and do not want a job.

Alternative Measures

Using these eight categories of data, the BLS publishes [in Table A-15] statistics for six definitions of unemployment, known as the Alternative Measures of Labor Underutilization.  [See http://www.bls.gov/news.release/empsit.t15.htm]  Each measure is expressed as a percentage of an associated labor force.  The measures are as follows:

U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force

U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)

U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers

U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force

U-6 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

Other Leading Statistics

The BLS also calculates and publishes several leading statistics:

News and Events

May 15, 2014, Ontario, CA - MIAA's founder, Jim Stuber, delivered the keynote address at the 20th annual World Trade Conference sponsored by the U.S. Department of Commerce and the California Inland Empire District Export Council in Ontario, California.  To view the conference agenda, click here:

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New file download

May 7, 2015, Radnor, PA.  MIAA's founder, Jim Stuber, appeared as the guest of host Richard J. Anthony, Sr. on The Entrepreneur's Network TV at Radnor Studio 21.  The program featured a discussion of the problems caused by offshoring manufacturing and white collar jobs and how consmers can solve the problem with their spending decisions. 

Studio 21 has made the program available for viewing here:

https://youtu.be/UIOwBD6-1pk

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