Current Unemployment Rate Chart

Seasonally Adjusted Unemployment RateAccording to the BLS, the current “Seasonally Adjusted” Unemployment Rate for November (released December 8th) is 4.1% Unchanged from October but down from 4.2% in September and 4.4% in August. It has been bouncing around between 4.3% and 4.4% since April, after declining from 4.8% in January.

November’s Unadjusted” rate is 3.9% also Unchanged from October and down from 4.1% in September and 4.5% in August and 4.6% in July. It started the year at 5.1% in January and 4.9% in February so it is down over a full percentage point since January although the seasonally adjusted rate is “only” down 0.7%.

See: Current Unemployment Rate Chart below.
Jump to:
Unemployment Rate Chart

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

“Total nonfarm payroll employment increased by 228,000 in November, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, manufacturing, and health care… the number of unemployed persons was essentially unchanged at 6.6 million. Over the year, the unemployment rate and the number of unemployed persons were down by 0.5 percentage point and 799,000,
respectively. 

The commissioner is talking about “Seasonally Adjusted Employment” after they corrected for late arriving data the non-adjusted numbers show  October Employment at 147,975,000 and 148,507,000 in October which is actually an increase of 532,000 jobs (yes over a half million jobs) rather than only 228,000 after seasonal adjustment.

Labor Force Participation Rate

 

After falling for years the Labor Force Participation Rate [LFPR] (which doesn’t mean what you think*) appears to have bottomed in mid-2015. (Higher is better so a falling LFPR is not good). As we can see from the chart above the trend is up slightly since mid-2015. But up until now it hasn’t been able to break above 63%. So September’s 63.1% break above 63% looked good but in October the BLS reported a very strange drop all the way to the support line at 62.7%. This is very surprising considering the 1.042 million increase in employment. You would think that a massive increase in employment would correspond with an increase in the Labor Force Participation Rate not a decrease. In November the LFPR held steady at 62.7% despite another half- million person increase in employment.

A fall below the support line would also not be a good sign. A decline in Labor Force Participation Rate indicates people dropping out of the Labor Force (not becoming unemployed).

*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 non-institutional 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.

Read more about the Labor Force Participation Rate (LFPR).

Seasonally Adjusted Unemployment Rate Chart 1948-Present

Current US Unemployment Rate Chart

 

 

(Click for Larger Image)

 

Employment and Unemployment Numbers:

  Unadj.
U-6
Unadj.
U-3
Adjusted
U-3
Employment Civilian
Population 
Monthly Civilian
Pop. Increase
January 2012 16.2% 8.8% 8.3% 131.113 Million 242.269 Million 1.685 Million
January 2013 15.4% 7.5% 7.9% 133.081 Million 244.663 Million 211,000
January 2014  13.5%  7.0% 6.6% 135.488 Million 246.915 Million 170,000
January 2015 12.0% 6.1% 5.7% 138.511 Million 249.723 Million 696,000
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% 146.158 Million 254.742 Million 202,000
January 2017 10.1% 5.1% 4.8% 143.273 Million 254.082 Million -660,000*
February 2017 9.5% 4.9% 4.7% 144.292 Million 254.246 Million 164,000
March 2017 8.9% 4.6% 4.5% 144.940 Million 254.414 Million 168,000
April 2017 8.1% 4.1% 4.4% 145.948 Million 254.588 Million 174,000
May 2017 8.1% 4.1% 4.3% 146.784 Million 254.767 Million 179,000
June 2017 8.9% 4.5% 4.4% 147.421 Million 254.957 Million 190,000
July 2017 8.9% 4.6% 4.3% 146.288 Million 255.151 Million 194,000
August 2017 8.6% 4.5% 4.4% 146.587 Million 255.357 Million 206,000
September 2017 8.0% 4.1% 4.2% 146.954 Million 255.562 Million 205,000
October 2017 7.6% 3.9% 4.1% 147.975 Million 255.766 Million 204,000
November 2017 7.7% 3.9% 4.1% 148.507 Million 255.949 Million 183,000
  Unadj.
U-6
Unadj.
U-3
Adjusted
U-3
Employment Civilian
Population 
Civ. Pop.
Increase
1 mo. Change 0.1% 0.0% 0.0% 532,000 183,000  
12 mo. Change -1.3% -0.5% -0.5% + 2.114 Million +1.445 Million  

Over the last month, the actual number of people working has increased by 532,000  and the civilian non-institutional population (a fairly narrow measurement of population) has increased by by a very low 183,000. This means that not only has the increase in jobs kept up with the increase in the population but it was actually almost 3 times greater than the increase in the population! And since only about half of the population is working, job growth has far exceeded the level needed to keep things on a steady keel.  Over the last 12 months the number of jobs has also grown faster than the civilian non-institutional population.

Read more about how Employment and Unemployment numbers compare.

*Note: January 2017 is the first time since we have been tracking the Civilian Population that we have seen it 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 2017 decrease is the result of Trump’s policies?

Alternative Data Sources Shrinking

For years the Gallup survey people have conducted their own survey to determine the unemployment rate and published an unadjusted version. Unfortunately, as of July 31, 2017 they have discontinued surveying unemployment related numbers including U-3, U-6 and Payroll to Population (aka. Good Jobs Metric). This puts us back to relying strictly on government sources and unfortunately in the past we found significant differences between what the government was telling us and what independently collected numbers told us.

For instance according to Gallup the Unadjusted Unemployment for June 2017 was 5.1% while the BLS said it was 4.5%. Gallup said Underemployment (U-6) was 13.4% while the BLS said it was 8.9%.

Unemployment Numbers BLS vs. Gallup June 2017

Unadjusted U-3 Unadjusted U-6
BLS 4.5% 8.9%
Gallup 5.1% 13.4%
Difference 0.6% 4.5%

 

Data Collection Methods:

For Calculating Unemployment the BLS says they interview “60,000 different households statistically calculated to represent the entire country.” However, they actually only contact about 15,000 of these households and then using statistical modeling they estimate the U.S. unemployment rate from this data sample. The households in the pool are rotated to limit the burden on any specific family.”  In addition to questions about employment status; the CPS tracks work experience, annual earnings, and whether school-aged children are working, school enrollment, etc.

Gallup on the other hand, creates weekly results which reflect “30-day rolling averages ending each Sunday, based on telephone interviews with approximately 30,000 adults.”

See Is the Government Fudging Unemployment Numbers?  for the comparison of Gallup numbers vs. Bureau of Labor Statistics numbers.

Historical Context

Currently the US (unadjusted) unemployment rate is 3.9% 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 October there were 148.006 million people employed compared to 146.148 Million in December 2016 and 144.116 in December 2015 although the U.S. population is also up by about 1.593 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 June 2017 was 8.9% while Gallup says it was 13.4%. There was a 4.5 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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