UnemploymentData.com

Employment Rate Chart

How Many People are Actually Employed?

Updated 2/3/2012

By Tim McMahon, editor

The U.S. Bureau of Labor Statistics has released its preliminary estimates for the employment situation for the month of January 2012. They have also released their “Seasonally Adjusted” Unemployment numbers with much fanfare and the markets rejoiced at the drop from 8.5% to 8.3%.  But if we look carefully at the actual unadjusted employment numbers we will get a much different picture.

The seasonally adjusted unemployment numbers look good steadily decreasing from 9% in September 2011 to 8.3% in January 2012 but  if we look at the number of people who actually have jobs we will see that the were 131.746 Million people with jobs in September and as many as 133.172 Million people working in November but in January there were only 130.263 Million working! That sounds to me like aproximately 1.5 million more unemployed people in January than in September! And almost 3 million less people working than in November!

So how can we believe the “Seasonally Adjusted” numbers? Supposedly they take into consideration the fact that January is traditionally worse than December because all the Christmas employees are laid off etc. And theoretically this gives us a clearer picture of what is happening in the big picture. Personally I like my data straight not mixed with a bunch of other factors to confuse the issue.

If we look at the data we can see that at 130.263 January 2012 had 2.689 million fewer people employed than in December 2011 at 132.952.

So how can the Employment rate say fewer people had jobs and the Unemployment rate say more people had jobs? One reason could be due to the process of “Seasonally Adjusting” which takes seasonal fluctuations in the employment rate into consideration. Another reason is that the Employment rate and the Unemployment rate are based on two entirely different surveys.

To determine the employment rate the U.S. government surveys 390,000 businesses nationwide every month. The raw number is what we use here and it is not  seasonally adjusted. This number is considerably more reliable than the 60,000 households that they survey to obtain the unemployment rate. And I prefer it to the seasonally adjusted number. This survey is submitted by the businesses monthly based on company employment on the 12th of the month.

By looking at the employment rate we will know how many jobs there are in our economy, pure and simple. (As Detective Joe Friday in Dragnet would say, “Just the facts Ma’am”). Are there more jobs than last year? Good! Are there fewer jobs than last year? Not good. Simple as that! There is of course the population factor. If the number of jobs stays the same but the population increases drastically then the unemployment rate will rise even though the number of jobs stayed the same. So looking at the unemployment rate is also important.

Looking back we can see that when Obama was elected in November 2008 there were 136.288 Million jobs so we are still roughly 3 million jobs below that level.

But the data shows 2.08 million more employed in January 2012 than in January 2011 so that is good and that may be the source of the good seasonally adjusted numbers.

If you look at the chart below it does look like the employment rate is climbing i.e. more people are getting jobs as the trend channel does seem to be up. Although we did see a slight drop in the number of jobs in December and a sharp drop in January.

In Europe they look at the employment rate. How many jobs are actually filled? Yes, I admit that it is important to know what percentage of the population wants to work but can’t find a job. But the problem is the tracking. When the government tracks the unemployment rate the number is subject to all kinds of variations.

See Current Unemployment Rate for an explanation of how the government calculates the official Unemployment rate.

A picture is worth a thousand words, so here is the current chart on a monthly basis since the year 2000. Notice that the trend over the last few months has been generally upward (more jobs) but there was a sharp drop in January contrary to what the “Seasonally adjusted Unemployment Rate” would have you believe and we are still nowhere near the employment levels of 2007-2008 and the population has increased in the mean time.

*Total Non-Farm Employment Not Seasonally Adjusted Rate

For more information See:

Historical Employment Data Chart

Current Unemployment Rate Chart

The Misery index measures inflation plus unemployment and is a good measure of the discomfort of the country’s population.