The U.S. Bureau of Labor Statistics (BLS) released the newest unemployment data for January 2015 on Friday February 6th. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for January is 5.7% up from December’s 5.6% but down from 5.8% in November. However, the BLS “Unadjusted” Unemployment Rate is 6.1% which is significantly higher than October’s 5.5%.
According to the BLS Commissioner’s report for this month:
Because they go by the “Seasonally Adjusted Unemployment Rate” the BLS commissioner said, “The unemployment rate, at 5.7 percent, changed little in January and has shown no net change since October.” But as we saw above when we look at the unadjusted numbers there actually was a 0.6% increase in unemployment from October through January.
I’ve been saying for some time that the BLS numbers are at best “misguided” and at worst a total fiction. Well recently none other than Jim Clifton, CEO of Gallup agreed. Here’s how he put it:
There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
I hear all the time that “unemployment is greatly reduced, but the people aren’t feeling it.” When the media, talking heads, the White House and Wall Street start reporting the truth – the percent of Americans in good jobs; jobs that are full time and real – then we will quit wondering why Americans aren’t “feeling” something that doesn’t remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class.
Based on demographic trends, I suggest the real unemployment rate after weeding out disability fraud, forced retirement, kids hiding out in school for lack of a job, and those who are not counted as unemployed simply because they gave up looking is more like 9% than 7%.
Plus to make matters worse according to the Gallup surveys Unadjusted Unemployment for January was 7.1% but that is significantly higher than the 6.1% reported by the BLS. Plus the BLS is actually spouting the adjusted number of 5.7% rather than the 7% Gallup says is under-reporting the real number of 9%!
Unemployment Numbers According to Gallup
|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 recovering 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.
In January 2015 the P2P fell again to 44.1%. 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.
|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%||141.483 Million||249.027 Million|
|January 2014||12.0%||6.1%||5.7%||138.728 million||249.723 Million|
|2 mo. Change||+1.0%||+0.6%||-0.1%||-2.750 Million
|12 mo. Change||-1.5%||-1.1%||-1.1%||3.212 Million||2.808 Million|
So over the last 2 months employment has decreased by -2.750 Million and the civilian non-institutional population (a fairly narrow measurement of population) has increased by 830,000 (which is about 500,000 higher than average, perhaps due to the number of illegal aliens that are now legal) so that results in a net loss of about -3.589 Million. But according to Gallup’s P2P, 44.1% of the population is working down from 45.2% in July 2014.
Currently the US (unadjusted) unemployment rate is 6.1% 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 January there were 138.728 million people employed down from 141.483 in December 2014. Once again the BLS adjusted the number of people employed going back a couple of years. This time “only” adding 227,000 imaginary jobs. Last year the changes made by the BLS added 513,000 more people working in December 2013 (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. The prior year they added 738,000 magical jobs making changes all the way back to May of 1979. 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.
According to the BLS U-6 in January 2015 is up 12.0% while Gallup says it is up 0.7% to 15.8%. There is a 3.8 percentage point difference between Gallup’s numbers and the BLS numbers. Or a totally ridiculous 31.66% margin of error. With over 140 million people working 31.66% is over 44 million people. 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?
Source: US-BLS Current Unemployment Rate Data