The U.S. Bureau of Labor Statistics (BLS) released the newest unemployment data. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for July 2014 (released August 1st) is 6.2% up from 6.1% in June but down from 6.3% in May. The BLS “Unadjusted” Unemployment Rate is 6.5% which is up from 6.3% in June, 6.1% in May and April’s 5.9% but down from January and February’s 7.0% and March’s 6.8%.
According to the commissioner of the Bureau of Labor Statistics, “Total non-farm payroll employment increased by 209,000 in July, the same as its average monthly gain over the prior 12 months. In July, employment grew in professional and business services, manufacturing, retail trade, and construction.”
So it seems strange that the unemployment rate went up. But then when we look at the unadjusted numbers it all becomes clear employment actually DECREASED by -1.11 Million in July from 139.776 million to 138.666 million. Isn’t it amazing that the Commissioner of the BLS can say out of one side of his mouth “Both the unemployment rate (6.2 percent) and the number of unemployed persons (9.7 million) changed little in July.” But when you look at the actual unadjusted numbers there were over a million fewer people working!
Source: http://data.bls.gov/timeseries/CEU0000000001 Data is in Thousands.
Employment, Hours, and Earnings from the Current Employment Statistics survey (National)
Series Id: CEU0000000001 Not Seasonally Adjusted Super Sector: Total nonfarm Industry: Total nonfarm NAICS Code: - Data Type: ALL EMPLOYEES, THOUSANDS
Gallup Unemployment Numbers Present a Different Picture
According to surveys by the Gallup organization Unadjusted Unemployment was 6.4% in July and for the first time in 17 months the Gallup number was actually lower than the BLS number.
Based on the comparison between the BLS numbers and the Gallup numbers the BLS numbers appear to have a bias to the downside. 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
According to Gallup the U.S. Payroll to Population employment rate (P2P), had been falling from mid-2013 but began picking up again in 2014. 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 45.7% in October 2012. In January the P2P bottomed at 42%, it rose to 43.4% in April.From there it has risen steadily to 45.1% in July.
The average P2P for 2012 was 44.4% and for 2013 was 43.8% so we are slightly ahead 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. Over just the last 12 months the U.S. population has increased by roughly 2 ¼ million people!
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.
|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%||139.776 Million||247.814 Million|
|July 2014||12.6%||6.5%||6.2%||138.666 Million||248.023 Million|
|2 mo. Change||0.6||0.4%||-0.2%||-.518 Million
|12 mo. Change||-1.7%||-1.2%||-1.3%||2.616 Million||2.262 Million||
So over the last 12 months employment has increased 2.616 million and the civilian non-institutional population (a fairly narrow measurement of population) increased by 2.262 million so that results in a net gain of 349,000 jobs. According to Gallup’s P2P, 45.1% of the population is working.
Currently the US (unadjusted) unemployment rate is 6.5% according to the “Current Population Survey” (CPS; household survey) and according to the newest release of Current Employment Statistics (CES) survey (the Employment Survey) in July there were 138.666 million people employed up from 138.266 in December 2013. Of course based on the number changes there were 513,000 more people working in December (according to January calculations) than 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.
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.
The BLS is now telling us U-6 in July 2014 is 12.6% while Gallup says it is 15.1%. There is a 2.5 percentage point difference between Gallup’s numbers and the BLS numbers. Or a 19.8% margin of error.
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 6.3% if we accept the government numbers or 7.5% if we use Gallup 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
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Source: US-BLS Current Unemployment Rate Data