Current Unemployment Rate Chart

Unemployment Rate ChartThe U.S. Bureau of Labor Statistics (BLS) released the newest unemployment data for January 2016 on Friday February 5th.

According to the BLS, the current “Seasonally Adjusted” Unemployment Rate  fell to 4.9% for January, from 5.0% for October through December. The current “Unadjusted” rate is up however at 5.3% but still down from 5.6% in July and much lower than January 2015’s unadjusted 6.1%.

According to the BLS Commissioner’s report for this month:

“Nonfarm payroll employment rose by 151,000 in January, and the unemployment rate, at 4.9 percent, changed little. Job growth occurred in several industries, including retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.”

But when they say “Nonfarm payroll employment rose by 151,000 in January” they aren’t talking about real jobs. They are talking about seasonally adjusted jobs. Actual jobs as indicated by the UNadjusted Employment saw a roughly 3 million job decrease from 144.112 million jobs in December to 141.123 million jobs in January. But the “increase” they are talking about is that jobs didn’t decrease as much this January as it usually does.

 

Current US Unemployment Rate Chart

Unemployment Rate Chart(Click for Larger Image)

Alternative Data

The Gallup survey people conduct their own survey to determine the unemployment rate and publish an unadjusted version. According to Gallup the Unadjusted Unemployment for January was 5.7%, compared to the Unadjusted 5.3% reported by the BLS.

Gallup says Underemployment (U-6) is 14.0% identical to last month but down from 15.8% in January 2015. On the other hand according to the BLS calculations,  the  U6 is “only” 10.5%.

Unemployment Numbers BLS vs. Gallup

Unadjusted U-3 Unadjusted U-6
BLS 5.3% 10.5%
Gallup 5.7% 14.0%
Difference 0.4% 3.5%

Based on the long-term comparison between the BLS numbers and the Gallup numbers; the BLS consistently presents a rosier picture than the Gallup numbers do with an average difference of 0.6333%. Theoretically the numbers are calculated slightly differently with Gallup measuring unemployment for those 18 and older while the BLS measures from 16 and older. But with the high unemployment rate of 16-18 year-olds,  this should actually make the BLS numbers higher than the Gallup numbers not lower, so it makes the understatement by the BLS even worse.

See Is the Government Fudging Unemployment Numbers?  for the comparison of Gallup numbers vs. Bureau of Labor Statistics numbers.

The Percentage of the Population that is Working

The U.S. Payroll to Population employment rate (P2P) is the percentage of the total adult population that is working full-time for an employer (higher means more people are working). The (P2P) for November according to Gallup is  44.7% in January down from 45.3% in December.

Note: Gallup has started calling the P2P the “Good Jobs Metric” meaning that 44.7% of the population aged 18 and older work for an employer for at least 30 hours per week. Gallup does not count adults who are self-employed, those who work fewer than 30 hours per week, or those who are unemployed or are out of the workforce. “Good Jobs” does not mean that they are employed at their full potential… it simply means that they have “full-time” jobs. For instance it is still difficult to live on 30 hours a week even if you are making 50% above minimum wage or roughly $10.87. That would be $326.25 per week gross and you would not qualify for benefits such as paid vacation, healthcare etc. So even if you worked 52 weeks a year you would only make $16,965/ year or roughly $1000 more than the federal poverty level for a family of two which is $15,930.

Generally, the higher the percentage of the population that is working the better- meaning fewer people are unemployed. According to Gallup the P2P had been getting worse from mid-2013 but began recovering in 2014.  A falling P2P could indicate rising unemployment although it could also indicate more people going to school, retiring, working part-time or self-employed.

The BLS however chooses to use the “Labor Force Participation Rate” which compares those who are employed versus those who are looking for a job. This would seem to be more reasonable in that those who aren’t interested in finding a job shouldn’t be counted. But it has the problem of determining who is actually in the labor force and is thus subject to “fudging”.

In January the Labor Force Participation Rate was 62.7% up from 62.5% in November but down from 62.9% in January 2015 and has been steadily falling since January 2008 when it was 66.2%. Which could be the result of baby-boomers retiring due to choice or a lack of jobs for seniors.

Background Information- Gallup Good Jobs Metric

Back in November 2013 the Good Jobs Metric (formerly P2P) was 42.9% (meaning that less than 43% of the people in the county were working full-time) down from 45.7% just a month earlier.

In January 2014 the P2P (Good Jobs Metric) bottomed at 42%, from there it rose steadily to peak at 45.1% in July but began falling to 44.9% in August. Then it began falling steadily, reaching 44.8 in September, 44.4% in October and 44.2% in November. In December 2014 it rose slightly to 44.3%, meaning a slightly greater percentage of the population was working.

The decline continued into 2015 with the Good Jobs Metric in January 2015 at 44.1% and in February 2015 it fell further to 43.9%. In March 2015 it rose a bit to 44.2% but fell back to 43.9% in April. In May 2015 it rebounded to exactly the same level as May of 2014 at 44.5%.

The average for 2012 was 44.4% and for 2013 was 43.8% so we are currently above the average of 2012 and 2013. According to the U.S. Census bureau over just the last 12 months the U.S. population has increased by roughly 2.8 million people with one birth every 8 seconds, one death every 13 seconds and one new immigrant every 33 seconds (faster than every 38 seconds last year) that results in a net gain in the U.S. population of one person every 13 seconds or  more than 4.6 people per minute.

 

Employment and Unemployment Numbers:

Unadj.
U-6
Unadj.
U-3
Adjusted
U-3
Employment Civilian
Population 
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
December 2013  13.0%  6.5% 6.7% 138.266 Million 246.745 Million
January 2014  13.5%  7.0% 6.6% 135.516 Million 246.915 Million
February 2014 13.1% 7.0% 6.7% 136.257 Million 247.085 Million
March 2014 12.8% 6.8% 6.7% 137.214 Million 247.258 Million
April 2014 11.8% 5.9% 6.3% 138.377 Million 247.439 Million
May 2014 11.7% 6.1% 6.3% 139.297 Million 247.622 Million
June 2014 12.4% 6.3% 6.1% 139.891 Million 247.814 Million
July 2014 12.6% 6.5% 6.2% 138.841 Million 248.023 Million
August 2014 12.0% 6.3% 6.1% 139.232 Million 248.229 Million
September 2014 11.3% 5.7% 5.9% 139.919 Million 248.446 Million
October 2014 11.1% 5.5% 5.8% 141.000 Million 248.657 Million
November 2014 11.0% 5.5% 5.8% 141.478 Million 248.884 Million
December 2014 11.1% 5.4% 5.6% 141.484 Million 249.027 Million
January 2015 12.0% 6.1% 5.7% 138.671 Million 249.723 Million
February 2015  11.4% 5.8% 5.5% 139.519 Million 249.899 Million
March 2015 11.0% 5.6% 5.5% 140.298 Million 250.080 Million
April 2015 10.4% 5.1% 5.4% 141.437 Million 250.266 Million
May 2015 10.4% 5.3% 5.5% 142.365 Million 250.455 Million
June 2015 10.8% 5.5% 5.3% 142.836 Million 250.663 Million
July 2015 10.7% 5.6% 5.3%  141.872 Million 250.876 Million
August 2015 10.3% 5.2% 5.1% 142.062 Million 251.096 Million
September 2015 9.6% 4.9% 5.1% 142.604 Million 251.325 Million
October 2015 9.5% 4.8% 5.0% 143.784 Million 251.541 Million
November 2015 9.6% 4.8% 5.0% 144.128 Million 251.747 Million
December 2015 9.8% 4.8% 5.0% 144.191 Million 251.936 Million
January 2016 10.5% 5.3% 4.9% 141.123 Million 252.397 Million
2 mo. Change 0.9% 0.3% -0.1% +0.427 Million +0.395 Million
12 mo. Change -1.6% -0.7% -1.5% + 2.708 Million +2.909 Million

So over the last two months the actual number of people working has increased by 427,000 and the civilian non-institutional population (a fairly narrow measurement of population) has increased by 395,000. Typically November and December has employment surges in anticipation of “Black Friday” sales and then Christmas sales. Unfortunately, employment levels usually fall back to previous levels when the holiday season is over. So January typically sees an increase in unemployment.

Historical Context

Currently the US (unadjusted) unemployment rate is 5.3according to the “BLS Current Population Survey” (CPS; household survey) and according to the newest release of Current Employment Statistics (CES) survey (the Employment Survey) in January there were 141.123 million people employed up from 138.511 in January 2015 although the population is also up.

Discouraged Workers:

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 again 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 actually 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.

According to the BLS U-6 in January 2016 was 10.5% while Gallup says it was 14.0%. There was a 3.5 percentage point difference between Gallup’s numbers and the BLS numbers.  Or a totally ridiculous 33.33% margin of error. 

According to Shadowstats the government is really underestimating unemployment by even more than our numbers suggest since “long-term discouraged workers were defined out of official existence in 1994.” The new U-6 numbers only include short-term discouraged workers.

The ShadowStats Alternate Unemployment Rate for December 2015 is 22.9%.

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%.  Subsequently the rate reached a peak of  10.1%.  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.

 

Source: US-BLS Current Unemployment Rate Data

Comments

  1. What needs to be recognized is that QE has brought slow but steady economic growth, rise in stock market indices, turn round of many recession hit companies and industries, and even cut in fiscal deficit. Exports are rising, too, cutting down the capital account deficit. All these indicators vividly point out that employment must have increased. Comparisons with the historical past are odious because technological imrovements and changes have improved labour productivity. Hence, the U. S. optimum unemployment rate would necessarily be higher than what it was before the global financial crisis in 2007-09. It is now necessary for the U. S. to alter its concept and base of unemployment in the new technological environment

  2. Tom Thomas says:

    Tim, If you want to compare U-3 numbers you have to look at the Labor Force Participation Rate. Bush admin averaged 5.2% with an LFPR around 65%. Obama’s current U-3 number of 6.7% was achieved with a LFPR of 63%.
    In order to compare Obama to Bush, or any other administration for that matter you have to adjust the current U-3, UP by the difference in the LFPR. So, Obama’s U-3 number is really 8.7% when you adjust for the current, dismal LFPR.
    So you have the BLS “number”, the Gallup number and the U-3 number adjusted for the LFPR under which the U-3 was achieved. My feeling is the LFPR-adjusted U-3 number is the most accurate

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