The U.S. Bureau of Labor Statistics (BLS) released the data for February. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for February 2014 (released March 7th) is 6.7% up from 6.6% in January. But the “Unadjusted” Unemployment Rate is 7% the same as in January.
However, according to surveys by the Gallup organization Adjusted Unemployment was actually 7.6% in February and Unadjusted Unemployment was 8.0%. Theoretically, the Gallup and BLS surveys are using the same methods! Last month the difference was 1.4% but this month the difference was “only” 1.0%! So based on Gallup data it appears that the BLS is underestimating Unemployment by 1%.
So we have a major divergence between what Gallup is telling us and what the BLS is claiming and the gap is significant. See Is the Government Fudging Unemployment Numbers? for the comparison of Gallup numbers vs. Bureau of Labor Statistics numbers.
In addition according to Gallup the U.S. Payroll to Population employment rate (P2P), as measured by Gallup, has been falling. The P2P is the percentage of the adult population that is working full-time for an employer . A falling P2P could indicate rising unemployment although it could also indicate more people going to school, retiring or working part-time. The P2P was 42.9% in November (meaning that less than 43% of the people in the county are working full-time) down from 44.6% in July and 45.7% in October 2012. And in January the P2P had fallen even further to only 42%, it rose slightly to 43.1% in February.
Current US Unemployment Rate Chart
(Click for Larger Image)
If we compare the BLS unemployment numbers to their own employment numbers we can get an idea of what is really happening.
In June 2013 the BLS said we had 136.769 million people employed (at least 1 hour a week) in November they say we had 137.942 million employed. So that looks good. A net increase of 1.173 million jobs. during that same period the civilian non-institutional population increased by 811,000.
|Unadjusted U-6||Unadjusted U-3||Adjusted U-3||Employment||Civilian Population||Net|
|December 2011||15.2%||8.3%||8.5%||133.625 Million||240.584 Million|
|December 2012||14.4%||7.6%||7.8%||135.938 Million||244.350 Million|
|January 2013||15.4%||8.5%||7.9%||133.074 Million||244.663 Million|
|February 2013||14.9%||8.1%||7.7%||134.112 Million||244.828 Million|
|March 2013||13.9%||7.6%||7.6%||134.917 Million||244.995 Million|
|April 2013||13.4%||7.1%||7.5%||135.911 Million||245.175 Million|
|May 2013||13.4%||7.3%||7.6%||136.793 Million||245.363 Million|
|June 2013||14.6%||7.8%||7.6%||137.195 Million||245.552 Million|
|July 2013||14.3%||7.7%||7.4%||136.050 Million||245.756 Million|
|August 2013||13.6%||7.3%||7.3%||136.477 Million||245.959 Million|
|September 2013||13.1%||7.0%||7.2%||137.069 Million||246.168 Million|
|October 2013||13.2%||7.0%||7.3%||138.013 Million||246.381 Million|
|November 2013||12.7%||6.6%||7.0%||138.266 Million||246.567 Million|
|December 2013||13.0%||6.5%||6.7%||138.266 Million||246.745 Million|
|January 2014||13.5%||7.0%||6.6%||135.433 Million||246.915 Million|
|February 2014||13.1%||7.0%||6.7%||136.183 Million||247.085 Million|
|2 mo. Change||+0.1%||+0.5%||-0.0%||-2.083 Million
|12 mo. Change||-1.8%||-1.1%||-1.0%||2.071 Million||2.257 Million||
So over the last 12 months employment has increased 2.071 million but the civilian non-institutional population (a fairly narrow measurement of population) increased by 2.257 Million so that results in a comparative net LOSS of 186,000. This agrees with to Gallup’s Payroll to Population (P2P) employment rate. So how can a decline in P2P possibly result in a decline in unemployment by -1.1% ? So even using the BLS’s own Employment numbers we can see that the Unemployment rate is not accurate.
Currently the US (unadjusted) unemployment rate is 7.0% according to the ”Current Population Survey” (CPS; household survey) and according to the newly adjusted (fudged) Current Employment Statistics (CES) survey (the Employment Survey) in January there were 135.396 million people employed down from 135.938 million in December 2012 or 138.266 in December 2013.
Back at the peak of the unemployment, there was some discussion in the media about “discouraged workers” U-6 is the broadest measurement of unemployment which includes ”discouraged workers” and part-time workers who would rather be working full-time but can’t find full-time employment. Back in November 2011 the unadjusted U-6 unemployment rate was 15.0% and in November 2012 just in time for the election it was down to 13.9% but in December 2012 it jumped up to 14.4% and in January 2013 it jumped back to 15.4% (worse than November 2011) in February 2013 it was 14.9%. In both April and May 2013 it was 13.4%, while in June it jumped back up to 14.6%. Gallop calls this the “Underemployment Rate” and says it is was 17.3% in July 2013, 17.4% in August and 17.1% in September exactly the same as July 2012 but down from 18% in July of 2011. Of course the BLS is telling us U-6 in January is “only” 13.5% up from 13.0% in December 2013. There is a 5.1% difference between Gallup’s 18.6% and BLS’s 13.5%. In October the numbers were Gallup 16.5% and BLS 13.2% still a 3.3% difference, in December the difference was 4.2%, so just like Pinoccio’s nose the lie is growing.
See U-6 Unemployment Rate for more information on the broader U-6 unemployment calculation that includes these “discouraged” unemployed and gives a truer picture of the total unemployment situation. Also see the Misery index ( which includes Unemployment Rate+ Inflation Rate). The adjusted unemployment rate in January of 2009 when Obama was sworn in was 7.8% the current adjusted unemployment rate is 7.2% if we accept the government numbers or 7.7% if we use Gallup numbers. In the intervening years the rate reached a peak of 10.1% with an average of 8.76%. The average unemployment rate during the Bush presidency was 5.3% and during the Clinton presidency it was 5.2%. In addition to looking at the unemployment rate, I prefer to look at the actual employment rate, which often shows a different picture, in that we can see how many people are actually employed and it is less easily manipulated, since the number of people who have opted for retirement or just stopped looking for work is not a factor. See the Current Employment Data.
How the US Government Comes Up with the Current Unemployment Rate
According to the U.S. Bureau of Labor Statistics they don’t actually track the unemployment numbers but instead they base the all important “Unemployment Rate” on a survey. You would think they would collect the numbers from the 50 states who would get them from their unemployment offices. But that is not how it is done. Unemployment rates are calculated based on a random survey called the Current Population Survey (CPS). Instead of calling the main office of 50 state offices, the government calls up 60,000 households every month and then estimates the unemployment rate based on that sample. According to the BLS,
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.
For more information on how the BLS performs the survey see BLS: How the Government Measures Unemployment Unemployment data is interesting but my question is always… yeah, but how many real people actually have jobs? In addition to calling 60,000 households, the government also performs a Current Employment Statistics (CES) survey where they collect data from employers. The CES survey sample is larger and so the employment data is considered more reliable than the unemployment data. For more information See: Current Employment Data Historical Employment Data Chart The Misery index measures inflation plus unemployment and is a good measure of the discomfort of the country’s population. Current Employment vs Unemployment Chart Are they just two sides of the same coin or is there more? Sometimes the best thing to do during times of economic decline is to go back to school and wait out the decline while improving your skills at the same time. See The Difference a Degree Makes in Unemployment Levels for more information on how a degree might help. Unemployment, Part-time Workers and Obamacare 7 Tips for the Newly Unemployed Job Hunting Success: How to Make Yourself More Employable Highly Skilled Worker Shortage in a Recession? The Fastest Growing Careers of 2012 Source: US-BLS Current Unemployment Rate Data