Current US Unemployment Rate: 6.7% BLS or 7.4% Gallup

The U.S. Bureau of Labor Statistics (BLS) released the newest unemployment data for March. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for March 2014 (released April 4th) is 6.7% up from 6.6% in January but steady from February. But the “Unadjusted” Unemployment Rate is 6.8% which is down from January and February’s 7.0%.

According to the commissioner of the Bureau of Labor Statistics,  “Total non-farm payroll employment rose by 192,000 in March, and the unemployment rate was unchanged at 6.7 percent.” According to the BLS the key areas of growth were,  “in professional and business services, in health care, and in mining and logging.”   He also said,  “The number of long-term unemployed (those jobless for 27 weeks or more), at 3.7 million, changed little in March”  and “The rates for teenagers (20.9 percent), whites (5.8 percent), blacks (12.4 percent), and Hispanics (7.9 percent) showed little or no change.” Unfortunately although the report was viewed positively the BLS also indicated that the number of individuals who were working part time because their hours had been cut back or because they were unable to find full-time work were “little changed at 7.4 million in March.”

Gallup Unemployment Numbers Present a Different Picture

According to surveys by the Gallup organization Adjusted Unemployment was actually 7.4% in March and Unadjusted Unemployment was 7.5%. But theoretically, the Gallup and BLS surveys are using the same methods! In January the difference was 1.4%,  in February the difference was  1% and in March the difference was “only” 0.7%. So maybe the BLS is starting to taper their fudging efforts.

Adjusted Unadjusted
BLS 6.7% 6.8%
Gallup 7.4% 7.5%
Difference 0.7% 0.7%

But we still have a major divergence between what Gallup is telling us and what the BLS is claiming. 0.7% may not sound like much but when you look at it as a percentage of the total it gives us a margin of error of  10.4%.  If we have 137 million people employed a margin of difference that large is the equivalent 9.6 million employees. 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 was 42%, it rose to 43.1% in February but fell back slightly to 42.7% in March. The average P2P for 2012 was 44.4% and for 2013 was 43.8% so we are not really getting ahead no matter what the unemployment rate says. The number of new jobs is not keeping up with the population growth so a smaller percentage of the people are working. Over just the last 12 months the U.S. population has increased by roughly 2 ¼ million people!

Current US Unemployment Rate Chart

Unemployment Rate

(Click for Larger Image)

If we compare the BLS unemployment numbers to their own employment numbers we can 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.

To recap:

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% 136.194 Million 247.085 Million
March 2014 12.8% 6.8% 6.7% 137.135 Million 247.258 Million
2 mo. Change -0.7% -0.2% +0.1% 1.684 Million
     343,000

 1.684 -.343=

1.341

12 mo. Change -1.1% -0.8% -0.9%  2.218 Million  2.263 Million

 2.218-2.263=

-0.045

So over the last 12 months employment has increased 2.218 million but the civilian non-institutional population (a fairly narrow measurement of population) increased by 2.263 million so that results in a comparative net LOSS of 45,000.  Of course according to Gallup’s P2P, less than half of the population is working so the situation is somewhat better than last year.

Historical Context

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. Of course based on the number changes there were 513,000 more people working in December (according to January calculations) than there were in December (according to December calculations).

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 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 now telling us U-6 in March 2013 is “only” 12.8% and Gallup says it is 16.9%. There is a 4.1% difference between Gallup’s numbers and the BLS numbers. This is down from a 5.1% difference last month.

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.

 

Source: US-BLS Current Unemployment Rate Data

Comments

  1. Just a wee bit biased, but the graph says it all. Almost half the increase in unemployment occurred by the time Obama was sworn in. It kept going up for a while. Then it started coming down at about the same rate as the last two recessions. Nothing magic here,folks!

    • Despite record amounts of quantitative easing (money printing) the recovery is anemic at best and so by your account there is no magic. I agree that the FED has been unable to generate any magic with their unprecedented Trillions but I don’t think that is what you meant.

  2. 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

  3. 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

Speak Your Mind

*