Thanks for the clarification, Doug. The question of how the unemployment rate is measured is a big and murky one. From where I sit the factor that skews the numbers the most is that of the labor force participation rate, people dropping in and out of the labor force, which they do a lot. It is fairly frequently the case the the changes in labor force participation swamp the changes in employment, thus meaning that the change in the unemployment rate actually is in the opposite direction of what is actually happening to unemployment, say measured as a percent of the working age population.
A simple example is the fact that from 1984 to 1987 the unemployment rate was nearly constant at around 7%. Nevertheless, with the exception of a blip in part of 1986, employment was steadily rising both in absolute numbers and as a percent of the working age population. It was just that all increases in employment were matched by increases in labor force participation. One always has to read behind the headlines to see what is really going on.
Right now the percent of the working age population in the US that is employed is quite high in historical terms. A big increase in women's employment (and labor force participation) has swamped a smaller decline in men's employment and labor force participation (the latter concentrated in highly paid industrial employment) over the last several decades. Of course a lot of these new jobs have been low paying and the distribution of wages and incomes has become much more unequal in the US. Also a lot of these jobs involve longer working hours. Barkley Rosser -----Original Message----- From: Doug Henwood <dhenwood at panix.com> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Thursday, June 17, 1999 4:38 PM Subject: Re: Unemployment 4.2%
>Adam Stevens wrote:
>
>>Didn't the Reagan Administration do something like that here, too?
>
>They briefly tried to include the armed forces in the count, which lowered
>the U rate by a tenth of a point or so, but no one bought it and the BLS
>went back the old civilian rate.
>
>>If I
>>understand correctly, the US unemployment rate is simply the number of
>>people who actually seeking/receiving unemployment benefits or assistance.
>
>The full skinny is at <http://www.bls.gov/cps_htgm.htm >. It's about 57k or
>I'd post it. Here are some highlights.
>
>Doug
>
>----
>
>Where do the statistics come from?
>
>Early each month, the Bureau of Labor Statistics (BLS) of the U.S.
>Department of Labor announces the total number of employed and unemployed
>persons in the United States for the previous month, along with many
>characteristics of such persons. These figures, particularly the
>unemployment rate--which tells you the percent of the labor force that is
>unemployed--receive wide coverage in the press, on radio, and on
television.
>
>Some people think that to get these figures on unemployment the Government
>uses the number of persons filing claims for unemployment insurance (UI)
>benefits under State or Federal Government programs. But some people are
>still jobless when their benefits run out, and many more are not eligible
>at all or delay or never apply for benefits. Indeed, typically less than a
>third of the unemployed file claims for UI benefits. So, quite clearly, UI
>information cannot be used as a source for complete information on the
>number of unemployed.
>
>Other people think that the Government counts every unemployed person each
>month. To do this, every home in the country would have to be
>contacted--just as in the population census every 10 years. This procedure
>would cost way too much and take far too long. Besides, people would soon
>grow tired of having a census taker come to their homes every month, year
>after year, to ask about job-related activities.
>
>Because unemployment insurance records relate only to persons who have
>applied for such benefits, and since it is impractical to actually count
>every unemployed person each month, 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 3,137 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 729 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 729 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. The approximately 60,000 households
>eligible for interview each month represent about 1 in every 1,600
>households in the country.
>
>Each 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.
>
>A sample is not a total count and the survey may not produce the same
>results that would be obtained from interviewing the entire population. But
>the chances are 90 out of 100 that the monthly estimate of unemployment
>from the sample is within 230,000 of the figure obtainable from a total
>census. Since monthly unemployment totals have ranged between about 6 and
>11 million in recent years, the possible error resulting from sampling is
>not large enough to distort the total unemployment picture.
>
>Because these interviews are the basic source of data for total
>unemployment, information must be factual and correct. 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.
>
>Similarly, interviewers do not decide the respondents' labor force
>classification. They simply ask the questions in the prescribed way and
>record the answers. Individuals are then classified as employed or
>unemployed by the computer based on the information collected and the
>definitions programmed into the computer.
>
>All interviews must follow the same procedures to obtain comparable
>results. Because of the crucial role interviewers have in the household
>survey, a great amount of time and effort is spent maintaining the quality
>of their work. Interviewers are given intensive training, including
>classroom lectures, discussion, practice, observation, home-study
>materials, and on-the-job training. At least once a year, they convene for
>day-long training and review sessions, and, also at least once a year, they
>are accompanied by a supervisor during a full day of interviewing to
>determine how well they carry out their assignments.
>
>A selected number of households are reinterviewed each month to determine
>whether the information obtained in the first interview was correct. The
>information gained from these reinterviews is used to improve the entire
>training program.
>
>
>
>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. Under these concepts, most people are quite easily classified. 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.
>
>
>
>These persons are counted among the employed and tabulated separately as
>"with a job but not at work," because they have a specific job to which
>they will return.
>
>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."
>
>
>
>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 jobsearch 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).
>
>The questions used in the interviews are carefully designed to elicit the
>most accurate picture of each person's labor force activities. Some of the
>major questions that determine employment status are: (The capitalized
>words are emphasized when read by the interviewers.)
>
>1. Does anyone in this household have a business or farm?
>
>2. LAST WEEK, did you do ANY work for (either) pay (or profit)?
>
>If the answer to question 1 is "yes" and the answer to question 2 is "no,"
>the next question is:
>
>3. LAST WEEK, did you do any unpaid work in the family business or farm?
>
>For those who reply "no" to both questions 2 and 3, the next key questions
>used to determine employment status are:
>
>4. LAST WEEK, (in addition to the business,) did you have a job either full
>or part time? Include any job from which you were temporarily absent.
>and
>5. LAST WEEK, were you on layoff from a job?
>and
>6. What was the main reason you were absent from work LAST WEEK?
>
>For those who respond "yes" to question 5 about being on layoff, the
>following questions are asked:
>
>7. Has your employer given you a date to return to work?
>and, if "no,"
>8. Have you been given any indication that you will be recalled to work
>within the next 6 months?
>
>If the responses to either question 7 or 8 indicate that the person expects
>to be recalled from layoff, he/she is counted as unemployed. For those who
>were reported as having no job or business from which they were absent or
>on layoff, the next question is:
>
>9. Have you been doing anything to find work during the last 4 weeks?
>
>For those who say "yes," the next question is:
>
>10. What are all of the things you have done to find work during the last 4
>weeks?
>
>If an active method of looking for work, such as those listed at the
>beginning of this section, is mentioned, the following question is asked:
>
>11. LAST WEEK, could you have started a job if one had been offered?
>
>If there is no reason, except temporary illness, that the person could not
>take a job, he/she is considered to be not only looking but also available
>for work and is counted as unemployed.
>
>
>Who is not in the labor force?
>
>Persons under 16 years of age are automatically excluded from the official
>labor force measurements, as are all inmates of institutions and persons on
>active duty in the Armed forces. All other members of the civilian
>noninstitutional population are eligible for inclusion in the labor force,
>and those 16 and over who have a job or are actively looking for one are so
>classified. All others--those who have no job and are not looking for
>one--are counted as "not in the labor force." Many who do not participate
>in the labor force are going to school or are retired. Family
>responsibilities keep others out of the labor force. Still others have a
>physical or mental disability which prevents them from participating in
>labor force activities.
>
>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?
>2. What is the main reason you were not looking for work during the LAST 4
>WEEKS?
>3. Did you look for work at any time during the last 12 months?
>4. LAST WEEK, could you have started a job if one had been offered?
>
>
>These questions form the basis for estimating the number of "discouraged
>workers"--persons without jobs who are not currently looking for work (and,
>therefore, are not counted among the unemployed) but who, nevertheless,
>have demonstrated some degree of labor force attachment. Specifically, to
>be classified as discouraged workers, individuals must indicate that they
>currently want a job, have looked for work in the last 12 months (or since
>they last worked, if they had worked sometime in the last year), are
>available for work, and that they are not currently looking for work either
>because they believe that no work is available in their line of work or
>area, they had previously been unable to find work, they lack necessary
>schooling, training, skills or experience, employers think they are too
>young or old, or they face some other type of discrimination.
>
>Additional questions about persons not in the labor force are asked of each
>household during the last month of its 4-month tenure in the sample
>rotation pattern. These questions are designed to collect information about
>why these people left their previous jobs, when they last worked at a job
>or business, whether they intend to look for work in the near future, and
>their current situation (retired, disabled, ill, in school, taking care of
>house or family, or something else).
>
>
>To summarize: Employed persons consist of:
>
>* All persons who did any work for pay or profit during the survey week.
>
>* All persons who did at least 15 hours of unpaid work in a
>family-operated enterprise.
>
>* All persons who were temporarily absent from their regular jobs
>because of illness, vacation, bad weather, industrial dispute, or various
>personal reasons.
>
>
>Unemployed persons are:
>
>
>* All persons who did not have a job at all during the survey week,
>made specific active efforts to find a job during the prior 4 weeks, and
>were available for work (unless temporarily ill).
>
>* All persons who were not working and were waiting to be called back
>to a job from which they had been temporarily laid off.
>
>
>