Current Unemployment Rate Chart

Unemployment Rate Mar-17The U.S. Bureau of Labor Statistics (BLS) released the newest unemployment data for February 2017 on Friday, March 10th.

According to the BLS, the current “Seasonally Adjusted” Unemployment Rate is 4.7% Down from 4.8% in January. The adjusted unemployment rate was 4.7% in December and 4.6% in November and 4.9% in October.

The current “Unadjusted” rate is 4.9% down from 5.1% in January. But up from 4.5% in December and 4.4% in November. Typically unadjusted unemployment rates jump in January for “Seasonal” reasons which is why we see a large jump in the unadjusted rates but a much smaller jump in the seasonally adjusted unemployment rate.

See: Current Unemployment Rate Chart below.

Jump to:

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

Although on an unadjusted basis employment fell by -2.95 million on a seasonally adjusted basis the Commissioner was able to claim a rise in employment.

“Nonfarm payroll employment rose by 235,000 in February, and the unemployment rate changed little at 4.7 percent. Job gains occurred in construction, private educational services,
manufacturing, health care, and mining… In the goods-producing sector, construction employment rose by 58,000 in February, after increasing by 40,000 a month earlier. Job growth continued among residential specialty trade contractors in February (+15,000). Employment among nonresidential specialty trade contractors grew by 22,000, after changing little in recent months. Job gains also occurred in heavy and civil engineering construction over the month (+15,000).”

Although the Commissioner’s Report says “Nonfarm payroll employment rose by 235,000 in February…” the reality is much better than that because he is actually talking about “Seasonally Adjusted Employment” typically employment increases in February. So what he is saying is that 235,000 more jobs than average were created. In unadjusted terms employment was 143.261 million in January and 144.271 million in February for a net gain of 1,010,000 jobs.

Labor Force Participation Rate

The Labor Force Participation Rate [LFPR] (which doesn’t mean what you think*) in July and August was 62.8% but increased to 62.9% in September. But then fell back to 62.8% for October and fell further in November to 62.6% and then rebounded slightly to 62.7% in December and returned to 62.9 in January and rose to 63% in February. (Higher is better so a falling LFPR is not good).

*You would think that the LFPR would mean the percentage of the population that is working. And a quick read of the definition presented by the BLS would reinforce that misconception. As a matter of fact, the BLS Glossary says this: Labor force participation rate- The labor force as a percent of the civilian noninstitutional population.

But the problem comes with the definition of “Labor Force” since further research on the BLS site leads you to this explanation:

  • The labor force participation rate is the percentage of the [civilian non-institutional] population that is either employed or unemployed (that is, either working or actively seeking work)
  • People with jobs are employed.
  • People who are jobless, looking for a job, and available for work are unemployed.
  • The labor force is made up of the employed and the unemployed.
  • People who are neither employed nor unemployed are not in the labor force.

How can you be neither employed or unemployed?  A rational person would think that you had to be one or the other. But according to the BLS definition… long term unemployed people are defined out of existence and therefore are neither employed nor unemployed. They are the roughly 40% of the population that aren’t participating in the labor force.

So, if you are long term unemployed (and therefore not in the labor force) and you start looking for a job two things happen to the statistics:

  1. The Unemployment Rate goes up because a new unemployed person is added.
  2. The Labor Force Participation rate goes up because a new person was added to the labor force.

Current US Unemployment Rate Chart

Unemployment Rate Mar-17(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 February was 5.5% down from 5.8% in January, 5.1% in December, and 4.9% in November.

Although Gallup says 5.8% the BLS says the Unadjusted Unemployment rate is only 4.9%.

Gallup says Underemployment (U-6) is  13.7% down from 14.1% in January but up from 12.7% in July and 13.1% in August. On the other hand, according to the BLS calculations,  the  U6 is 9.5% down from 10.1% in January but up from 9.1% in December.

Unemployment Numbers BLS vs. Gallup

Unadjusted U-3 Unadjusted U-6
BLS 4.9% 9.5%
Gallup 5.5% 13.7%
Difference 0.6% 4.2%

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 0.6308%.

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 February according to Gallup is 44.7% down from the peak of 47.0% in July 2016 and  46.2% in November 2016.

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 since you only work 30 hours, 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 or as has happened since 2010 more people defined out of the labor force due to long-term unemployment.

Instead of P2P, the BLS chooses to use the “Labor Force Participation Rate (LFPR)” which  as mentioned above is the percentage of the civilian non-institutional population that is either working or actively seeking work. So an LFPR of 60% means that 60% of the  civilian non-institutional population is either working or looking for work and 40% are not working or even looking for work.

In February the Labor Force Participation Rate was 63.0% up from 62.9% in January and  62.8 in July through September 2016. It was 62.9% in February 2015. The LFPR has fallen significantly since January 2008 when it was 66.2%. Which some have suggested is the result of baby-boomers retiring but data suggests that Seniors are actually taking lower paying jobs (think Walmart greeter) and pushing younger workers out of the workforce.

David Stockman a two-term Congressman from Michigan and Director of the Office of Management and Budget under President Ronald Reagan says:

In fact, at the February 2008 peak prior to the crisis, the BLS reported 138.5 million nonfarm payroll jobs compared to 143.9 million in April 2016. The net gain is thus only 5.6 million, and it means nearly 9 million or 61% of the 14 million new jobs our President has been crowing about are not “new” at all; they were born-again jobs, and even then they consist of lower paying and lesser quality jobs than the ones obliterated during the crash and so-called Great Recession.

For instance, there has been a loss of 2.3 million goods-producing jobs in manufacturing, mining/energy and construction, paying an average of$58,000 per year; and these have been swapped for 1.9 million jobs in leisure and hospitality paying less than $20,000 per year.

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 
Civ. Pop.
Increase
January 2012 16.2% 8.8% 8.3% 131.113 Million 242.269 Million 1.685 Million
January 2014  13.5%  7.0% 6.6% 135.488 Million 246.915 Million 170,000
February 2014 13.1% 7.0% 6.7% 136.230 Million 247.085 Million 170,000
March 2014 12.8% 6.8% 6.7% 137.187 Million 247.258 Million 173,000
April 2014 11.8% 5.9% 6.3% 138.325 Million 247.439 Million 181,000
May 2014 11.7% 6.1% 6.3% 139.237 Million 247.622 Million 183,000
June 2014 12.4% 6.3% 6.1% 139.824 Million 247.814 Million 192,000
July 2014 12.6% 6.5% 6.2% 138.841 Million 248.023 Million 209,000
August 2014 12.0% 6.3% 6.1% 139.125 Million 248.229 Million 206,000
September 2014 11.3% 5.7% 5.9% 139.812 Million 248.446 Million 217,000
October 2014 11.1% 5.5% 5.8% 140.866 Million 248.657 Million 211,000
November 2014 11.0% 5.5% 5.8% 141.331 Million 248.884 Million 187,000
December 2014 11.1% 5.4% 5.6% 141.327 Million 249.027 Million 183,000
January 2015 12.0% 6.1% 5.7% 138.511 Million 249.723 Million 696,000
February 2015  11.4% 5.8% 5.5% 139.343 Million 249.899 Million 176,000
March 2015 11.0% 5.6% 5.5% 140.099 Million 250.080 Million 181,000
April 2015 10.4% 5.1% 5.4% 141.283 Million 250.266 Million 186,000
May 2015 10.4% 5.3% 5.5% 142.224 Million 250.455 Million 189,000
June 2015 10.8% 5.5% 5.3% 142.701 Million 250.663 Million 208,000
July 2015 10.7% 5.6% 5.3%  141.747 Million 250.876 Million 213,000
August 2015 10.3% 5.2% 5.1% 141.939 Million 251.096 Million 220,000
September 2015 9.6% 4.9% 5.1% 142.497 Million 251.325 Million 229,000
October 2015 9.5% 4.8% 5.0% 143.645 Million 251.541 Million 216,000
November 2015 9.6% 4.8% 5.0% 144.066 Million 251.747 Million 206,000
December 2015 9.8% 4.8% 5.0% 144.063 Million 251.936 Million 189,000
January 2016 10.5% 5.3% 4.9% 141.088 Million 252.397 Million 461,000
February 2016 10.1% 5.2% 4.9% 141.919 Million 252.577 Million 180,000
March 2016 9.9% 5.1% 5.0% 142.814 Million 252.768 Million 191,000
April 2016 9.3% 4.7% 5.0% 143.894 Million 252.768 Million 201,000
May 2016 9.4% 4.5% 4.7% 144.525 Million 253.174 Million 205,000
June 2016 9.9% 5.1% 4.9% 145.182 Million 253.397 Million 223,000
July 2016 10.1% 5.1% 4.9% 144.203 Million 253.620 Million 223,000
August 2016 9.7% 5.0% 4.9% 144.441 Million 253.854 Million 234,000
September 2016 9.3% 4.8% 5.0% 145.084 Million 254.091 Million 237,000
October 2016 9.2% 4.7% 4.9% 145.969 Million 254.321 Million 230,000
November 2016 9.0% 4.4% 4.6% 146.393 Million 254.540 Million 219,000
December 2016 9.1% 4.5% 4.7% 146.168 Million 254.742 Million 202,000
January 2017 10.1% 5.1% 4.8% 143.220 Million 254.082 Million -660,000*
February 2017 9.5% 4.9% 4.7% 144.271 Million 254.246 Million 164,000
1 mo. Change -0.6% -0.2% -0.1% 1.010 Million 164,000
12 mo. Change -0.6% -0.3% -0.2% + 2.352 Million +1.685 Million

Over the last month, the actual number of people working has increased by just over 1 million and the civilian non-institutional population (a fairly narrow measurement of population) has increased by 164,000. Over the last 12 months the number of jobs grew faster than the civilian non-institutional population.

*Note: January 2017 is the first time since we have been tracking the Civilian Population that we have seen a decrease. January 2016 saw an increase of 461,000. The BLS says that they readjust their numbers every January to match the Census bureau numbers.

The last time we saw a major deviation from the normal increase was in January 2012 when the population increased by 1.685 million possibly because Obama legalized a bunch of illegal aliens at that time. Is it possible that the current decrease is the result of Trump’s policies?

Historical Context

Currently the US (unadjusted) unemployment rate is 4.9% 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 February there were 144.271 million people employed down from 146.148 Million in December 2016 and 144.116 in December 2015 although the U.S. population is also up by about 1.685 million over the last 12 months.

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 February 2017 was 9.5% while Gallup says it was 13.7%. There was a 4.2 percentage point difference between Gallup’s numbers and the BLS numbers. 

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. Once we understand that the Labor Force Participation Rate does not include “Long Term Unemployed” we can see that the a big part of the decline in the BLS numbers is accounted for simply by redefining long term unemployed individuals as out of the labor force and so as if by magic the unemployment rate falls. But the ShadowStats number which refuses to ignore these people remains steady.

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). No one can accuse the government of being efficient, rather than calling the main office of 50 state offices (or having the 50 state numbers automatically reported), instead 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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