Current Employment Commentary:
The U.S. Bureau of Labor Statistics (BLS) has released its preliminary estimates for the employment situation for the month of April 2013 (they are considered “preliminary” for two more months to adjust for late arriving data). Employment fell drastically from November 2012 to January 2013 but it rebounded a bit in February through April but still isn’t quite up to November levels. Employment in November 2012 135,636,000 (135.6 Million) employment in April 135,494,000 (135.49 Million).
The “Unemployment Rate” on the other hand says we are doing better than in November. The official “Seasonally Adjusted Unemployment Rate” shows a decrease from 7.8% in November to 7.4% in April. But by looking at this chart we can can see that employment is basically the same in November and April. But the Civilian Non-Institutional Population grew by 1,001,000. So how can unemployment decline when the same number of people are employed but the number of people available for work grew by a million people? Hmmm.
BLS Changes Employment Numbers
For a while now I’ve been ranting about how the BLS changed the employment numbers all the way back to July of 1991. I contacted the Bureau of Labor Statistics and they curtly pointed me to a short hidden blurb on their website that supposedly explains why they did it. See BLS Changes Employment Numbers for the full (pseudo) expanation.
Note: The Employment rate and the Unemployment rate are based on two entirely different surveys but theoretically they should be two sides of the same coin. If you look at the chart above 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.
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. Unfortunately, it still doesn’t give us the full picture. If the U.S. population is growing (and it is) but the number of jobs only holds steady the number of people without jobs will increase. So in order for the real unemployment rate to stay the same the number of jobs has to increase at at least the same rate as the population. If the number of jobs increases at anything less than the rate at which the population is increasing, the unemployment rate will be increasing.
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 but for some reason the first release is considered preliminary to allow for late arrivals and it often changes significantly in later months (when the public is no longer watching). For instance the October 2012 number fell 90,000 from 134,792,000 originally released (prior to the election) to 134,702,000 after the election. So rather than more jobs appearing due to late arrivals they somehow overestimated the number of jobs by 90,000… hmmm.
See Current Unemployment Rate for an explanation of how the government calculates the official Unemployment rate.
Source: U.S. Bureau of Labor Statistics- Current Employment Rate Data
For more information See:
- Article: Employment vs. Unemployment how do they compare?
- Historical Employment Data Chart
- Current Unemployment Rate Chart
- Current Employment vs Unemployment Chart Are they really “two sides of the same coin”?
- What is U-6 Unemployment?
- The Misery index measures inflation plus unemployment and is a good measure of the discomfort of the country’s population.
- More Unemployment and Employment Charts
- 10 Awesome Jobs You Can Do From Home