The U.S. Bureau of Labor Statistics (BLS) released the newest unemployment data for December 2014 on Friday January 9th. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for December is 5.6% down from 5.8% in November. The BLS “Unadjusted” Unemployment Rate is 5.4% which is also identical to October down from 5.5% in November.
According to the BLS Commissioner’s report for this month:
“Incorporating revisions for October and November, which increased total nonfarm payroll employment by 50,000, monthly job increases have averaged 289,000 over the past 3 months. In 2014, job growth averaged 246,000 per month, compared with 194,000 per month in 2013.”
During the last 12 months the Civilian non-institutional population increased by an average of 190,000 per month so employment increased faster than the population grew over the last year.
According to BLS numbers, in November total non-farm employment peaked at 141,321,000 in December total non-farm employment had fallen a bit to 141,256,000 for a net loss of 65,000 jobs. I can understand Seasonally Adjusted Unemployment falling from 5.8% to 5.6% because that’s what Seasonal Adjustment does but somehow unadjusted unemployment also fell from 5.5% to 5.4%.
Unemployment Numbers According to Gallup
According to surveys by the Gallup organization Unadjusted Unemployment for December was 5.8% which is significantly higher than the 5.4% reported by the BLS.
|Unadjusted U-3||Unadjusted U-6
Once again the BLS numbers are quite a bit different than the independently generated Gallup numbers. This is no surprise, based on the long-term comparison between the BLS numbers and the Gallup numbers the BLS numbers consistently present a rosier picture than the Gallup numbers do. Theoretically the numbers are slightly different 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 adult population that is working full-time for an employer . Obviously, a higher percentage working is better- meaning fewer people are unemployed. According to Gallup the P2P had been getting worse from mid-2013 but began rising again in 2014 but the P2P appears to be falling again after peaking in August. 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 2013 (meaning that less than 43% of the people in the county are working full-time) down from 45.7% in October.
In January 2014 the P2P bottomed at 42%, it rose to 43.4% in April. From there it rose steadily to 45.1% in July but fell back to 44.9% in August. From there P2P fell steadily, 44.8 in September, 44.4% in October and 44.2% in November. In December 2014 the P2P rose slightly to 44.3%, meaning a slightly greater percentage of the population was working.
The average P2P for 2012 was 44.4% and for 2013 was 43.8% so we are currently below the average of 2012. The number of new jobs is barely keeping up with the population growth so the percentage of the people that are working is roughly the same. According to the U.S. Census bureau over just the last 12 months the U.S. population has increased by roughly 2.2 million people with one birth every 8 seconds, one death every 12 seconds and one new immigrant every 38 seconds that results in a net gain in the U.S. population of one person every 15 seconds or 4 people per minute.
Current US Unemployment Rate Chart
(Click for Larger Image)
If we compare the BLS unemployment numbers to their own employment numbers we can also get a better 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.
*Numbers based on originally released numbers- the numbers were revised in January 2014 to 137.195 million and 138.536 million.
By August of 2014 there were 138.989 million people working.
|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%||138.536 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%||135.451 Million||246.915 Million|
|February 2014||13.1%||7.0%||6.7%||136.192 Million||247.085 Million|
|March 2014||12.8%||6.8%||6.7%||137.147 Million||247.258 Million|
|April 2014||11.8%||5.9%||6.3%||138.265 Million||247.439 Million|
|May 2014||11.7%||6.1%||6.3%||139.184 Million||247.622 Million|
|June 2014||12.4%||6.3%||6.1%||139.772 Million||247.814 Million|
|July 2014||12.6%||6.5%||6.2%||138.669 Million||248.023 Million|
|August 2014||12.0%||6.3%||6.1%||139.061 Million||248.229 Million|
|September 2014||11.3%||5.7%||5.9%||139.753 Million||248.446 Million|
|October 2014||11.1%||5.5%||5.8%||140.811 Million||248.657 Million|
|November 2014||11.0%||5.5%||5.8%||141.321 Million||248.884 Million|
|December 2014||11.1%||5.4%||5.6%||141.256 Million||249.027 Million|
|2 mo. Change||-0.0%||-0.1%||-0.2%||445,000
|12 mo. Change||-1.9%||-1.1%||-1.1%||2.990 Million||2.765 Million||
So over the last 2 months employment has increased by 445,000 and the civilian non-institutional population (a fairly narrow measurement of population) has increased by 370,000 so that results in a net gain of about 75,000. But according to Gallup’s P2P, 44.3% of the population is working down from 44.4% two months ago.
Currently the US (unadjusted) unemployment rate is 5.4% according 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 November there were 141.256 million people employed up from 138.266 in December 2013. Of course based on the number changes made by the BLS there were 513,000 more people working in December (according to January calculations) than they said there were there were in the same month (according to December calculations). A magical increase of 1/2 million jobs out of nowhere. So they magically created more jobs in January than the economy really created over the next 6 months. See BLS Changes Employment Numbers for the details.
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.
The BLS is now telling us U-6 in November 2014 is down 0.1% to 11.0% while Gallup says it is up 0.3% to 15.1%. There is a 4.1 percentage point difference between Gallup’s numbers and the BLS numbers. Or a totally ridiculous 37.3% margin of error. With over 140 million people working 37.3% is over 52 million. That seems like a big difference to me.
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 6.1% if we accept the government numbers. In the intervening years the rate reached a peak of 10.1% with an average of 8.54%. 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