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Reference

US unemployment background

This page is about definitions and long term context for the BLS unemployment numbers.

Summary

11 Jul 2009.

Most reported unemployment statistics are from the Bureau of Labor Statistics in the Department of Labor. All the BLS unemployment data are from the Current Population Survey, a monthly survey of a probability sample of approximately 60,000 households, conducted by the Bureau of the Census for the BLS. Data are collected by personal and telephone interviews. Response is voluntary, but only about 4% refuse. Roughly speaking, the BLS divides the population into the “Employed” (E), the “Unemployed” (U; must have looked for a job in the last four weeks), the “Marginally attached” (M; looking for a job but not in the last 4 weeks), those not looking for a job at all (N), and the institutionalized. The unemployment rate usually reported is U-3, including just the Unemployed (U / E + U). There is also a broader measure of unemployment, U-6, which includes the Unemployed, those working part-time for economic reasons (i.e. wanting full-time ; PTER), and the Marginally attached; these are all the people who are looking for full-time work but are unable to find it (U + PTER + M / E + U + M). There is one other statistic of interest, the “Not employed”. This includes those who are not looking for work (NLFW; so U + M + NLFW / E + U + M + NLFW). The survey questions and the definitions have changed over time. Probably the official unemployment rate has been pretty stable over time but, strictly speaking, current data is only comparable to data back to Jan 1994.

Highlights

Entries below covered through 3 Jul 2008:

  • Background
    • Definitions (3 Jul 2008) Roughly speaking, the BLS divides the population into the “Employed”, the “Unemployed”, the “Marginally attached” (looking for a job but not in the last 4 weeks), those not looking for a job at all, and the institutionalized.
      • Universe. Those who are under 16 or are in rest homes, prisons, mental institutions, or the armed forces, and so are clearly not going to look for a job, are excluded from all the main categories; the main universe for discussion is the 'Civilian non-institutional population'.
      • Employed. Those employed are defined in a fairly obvious way; note that those who want a full-time job but have settled for part-time are counted as employed.
      • Unemployed. The unemployment concept is slightly more ambiguous. 'Unemployed' means not working and 'available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week.' A slightly more inclusive definition of unemployment might include those who are 'Marginally attached', defined as 'who want and are available for work, and who have looked for a job sometime in the prior 12 months', even if they have not looked in the last four weeks. (The marginally attached also include 'Discouraged workers', who believe there is no job available.)
      • Labor force. Includes the 'employed' and 'unemployed' but not the 'marginally attached'.
      • Not employed. Includes 'Unemployed', 'Marginally attached', plus those who are not looking at all; formally defined as the Civilian non-institutional population but not employed. (The Not employed number is formally part of the American Time Use Survey, not the Current Population Survey (CPS). However it uses CPS definitions and can be calculated from CPS reports.)
  • Changes over time (3 Aug 2008) The survey as well as the definitions have changed over time. The last major set of changes was in Jan 1994. Some measures changed quite drastically, but the BLS estimated that the official unemployment rate changed (increased) by only perhaps 0.2 percentage point.
  • Survey (3 Jul 2008) All the BLS unemployment data are from the Current Population Survey, a monthly survey of a probability sample of approximately 60,000 households, conducted by the Bureau of the Census for the BLS. Data are collected by personal and telephone interviews. Response is voluntary, but only about 4% refuse.

Sources

  • Department of Labor, Bureau of Labor Statistics. www.bls.gov.

See also

1994 changes in the survey

Oct 1995. Monthly Labor Review, scanned paper on BLS website.

http://www.bls.gov/opub/mlr/1995/10/art3full.pdf

“BLS introduces new range of alternative unemployment measures. John E. Bregger and Steven E. Haugen”

“since the inception of the survey in 1940, only relatively minor changes have been made to the official definition of unemployment. (Definitionally, it was not changed at all, except for elimination of a small group of persons, namely those who volunteered the information that they were waiting to start a new job within 30 days, most of whom undoubtedly meet the jobseeking tests in any case. There were, however, changes in the wording of nearly all the questions – particularly as regards persons on layoff – that affected the underlying data in limited ways) … Most analysts monitor unemployment because of its role as a cyclical indicator … represents the degree to which available labor resources are not being utilized in the economy … The [January] 1994 redesign … a number of changes made to the questionnaire and overall survey methodology affected the measure of employment, unemployment, and persons not in the labor force; and second, several definitional changes were introduced. … employed part-time for economic reasons. The figure was sharply lower under the redesigned survey, as respondents were explicitly asked about their desire and availability for full-time work. … Considerable tightening of the requirements for discouraged worker status reduced the number of persons so classified by about half. … Effects on indicator U-5 [which became U-3 in the new numbering system] … the official unemployment rate … marginally higher - an estimated 0.2 percentage point - under the redesigned CPS … effects on indicator U-7 [the most comprehensive, roughly corresponding to U-6 now] … markedly higher in the old survey than under the new one.”

[U-5b is the pre-1994 equivalent to the 1994-and-after U-3, i.e. the official unemployment rate]

Current Population Survey methodology

17 Apr 2003. BLS Handbook, on the BLS website.

http://www.bls.gov/opub/hom/homch1_b.htm

“Labor Force Data Derived from the Current Population Survey”

“Description of the Survey

The CPS collects information on the labor force status of the civilian noninstitutional population 15 years of age and older, although labor force estimates are reported only for those 16 and older. Persons under 16 years of age are excluded from the official estimates because child labor laws, compulsory school attendance, and general social custom in the United States severely limit the types and amount of work that these children can do. Persons on active duty in the U.S. Armed Forces are excluded from coverage. The institutional population, which also is excluded from coverage, consists of residents of penal and mental institutions and homes for the aged and infirm.

The CPS is collected each month from a probability sample of approximately 60,000 households. Respondents are assured that all information obtained is completely confidential and is used only for the purpose of statistical analysis. Although the survey is conducted on a strictly voluntary basis, refusals to cooperate amount to only about 4 percent each month. (Another 3 to 4 percent of eligible households are not interviewed because of other failures to make contact.)

A calendar week was selected as the survey reference period because the period used must be short enough so that the data obtained are “current,” but not so short that such occurrences as holidays or bad weather might cause erratic fluctuations in the information obtained. In addition, the reference period should not be so long that it challenges the recall of the respondent. A calendar week fulfills these conditions. Since July 1955, the calendar week, Sunday through Saturday, that includes the 12th day of the month has been defined as the reference week. The actual survey is conducted during the following week, the week containing the 19th day of the month.”

Short description of the Current Population Survey

27 Jul 2004. BLS web site

http://www.bls.gov/cps/cps_over.htm#overview

“The Current Population Survey, a monthly household survey conducted by the Bureau of the Census for the Bureau of Labor Statistics, provides a comprehensive body of information on the employment and unemployment experience of the Nation's population, classified by age, sex, race, and a variety of other characteristics. … data are collected by personal and telephone interviews. Basic labor force data are gathered monthly; data on special topics are gathered in periodic supplements.”

BLS population group definitions

3 Jul 2008. BLS website, Glossary page.

http://www.bls.gov/bls/glossary.htm

  • Civilian noninstitutional population (Current Population Survey) Included are persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.
  • Discouraged workers (Current Population Survey) Persons not in the labor force who want and are available for a job and who have looked for work sometime in the past 12 months (or since the end of their last job if they held one within the past 12 months), but who are not currently looking because they believe there are no jobs available or there are none for which they would qualify.
  • Employed persons (American Time Use Survey) Same as definition for Employed persons (Current Population Survey), EXCEPT that in the American Time Use Survey, the definition includes persons 15 years and over and the reference period is the last 7 days prior to the American Time Use Survey interview.
  • Employed persons (Current Population Survey) Persons 16 years and over in the civilian noninstitutional population who, during the reference week, (a) did any work at all (at least 1 hour) as paid employees; worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family; and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs. Each employed person is counted only once, even if he or she holds more than one job. Excluded are persons whose only activity consisted of work around their own house (painting, repairing, or own home housework) or volunteer work for religious, charitable, and other organizations.
  • Labor force (Current Population Survey) The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in this glossary.
  • Labor force participation rate. The labor force as a percent of the civilian noninstitutional population.
  • Marginally attached workers (Current Population Survey) Persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Discouraged workers are a subset of the marginally attached. (See Discouraged workers.)
  • Not employed (American Time Use Survey) The term refers to persons who are classified as unemployed as well as those classified as not in the labor force (using Current Population Survey definitions).
  • Not in the labor force (Current Population Survey) Includes persons aged 16 years and older in the civilian noninstitutional population who are neither employed nor unemployed in accordance with the definitions contained in this glossary. Information is collected on their desire for and availability for work, job search activity in the prior year, and reasons for not currently searching. (See Marginally attached workers.)
  • Part-time workers (Current Population Survey and American Time Use Survey) Persons who work less than 35 hours per week.
  • Unemployed persons (Current Population Survey) Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.
  • Unemployment rate. The unemployment rate represents the number unemployed as a percent of the labor force.

One attempt at relating today's unemployment to the 30's

12 May 2009. The Economic Populist.

http://www.economicpopulist.org/content/u3-and-u6-unemployment-during-great-depression

[Bottom line: stats are not directly comparable, but unemployment today is nowhere near as bad as it was in the depression.]

Overview of labor market statistics during the great depression

19 Jun 2009. Congressional Research Service.

http://assets.opencrs.com/rpts/R40655_20090619.pdf

“The Labor Market during the Great Depression and the Current Recession. Linda Levine”

“A good deal of commentary has addressed similarities between the recession that began in December 2007 and the Great Depression. Comparisons between the two have extended beyond conditions in financial markets to conditions in the labor market. The analogy appears to be fueled by projections that the unemployment rate could reach double digits in the coming months.

Little if any comparative labor market research has been undertaken, however. To address the situation, this report analyzes the experiences of workers during the 1930s, which encompassed the almost five years of the Great Depression. Because it was a period very distant and different from today, the report devotes considerable time to examining the employment and unemployment measures then available. The report ends by comparing the labor market conditions of the 1930s with those encountered by workers thus far during the nation’s eleventh recession of the post-World War II period. …

[It is very difficult to compare unemployment rates, but NFP did exist at the time, and shows that the great depression really was much worse than any recession since:]

Employers cut the total number of jobs on their payrolls much more deeply during the Great Depression than they have thus far in the latest recession. Between 1929 and 1933, employment on nonfarm payrolls fell by 24.3%, compared to 4.3% thus far in the recession.”