Unemployment (U.S.)

guardian.co.uk  44 min ago  Comment 
Social democrats usually look to Sweden for inspiration, but after a disastrous policy experiment under similar circumstances to Australia, let’s be wary Australia’s unemployment rate is the highest it’s been in twelve years, and the...
New York Times  3 hrs ago  Comment 
Weekly unemployment benefit applications dropped 6,000 to a seasonally adjusted 289,000, the Labor Department said on Thursday.
MarketWatch  Dec 18  Comment 
The number of people who applied for new unemployment benefits in mid-December remained below 300,000, a level typically associated with strong hiring.
Market Intelligence Center  Dec 18  Comment 
U.S. markets are rising this  morning after getting a big bounce from yesterday’s announcement that the Federal Reserve will be “patient” in raising interest rates. The S&P 500 is up 1.02% and the Dow is up 0.98%. There were 289,000 initial...
Forbes  Dec 18  Comment 
We expect to see an increase in Paychex?s checks per client driven by the decline in the unemployment rate to a six-year low. Also, as the deadline for compliance with the Affordable Care Act regulation approaches, Paychex should see an increase...
Yahoo  Dec 18  Comment 
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market continued to strengthen. While other data on Thursday showed factory activity ...
The Economist  Dec 17  Comment 
WHAT could be better than an economy converging rapidly on full employment? A central bank in no mood to get in the way. That is the happy combination America now enjoys, and it explains the stock market's euphoric reaction to today's meeting of...
New York Times  Dec 16  Comment 
Many economists are convinced that falling unemployment and increased hiring are finally about to start paying off in terms of wage gains for a broader swath of workers.




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This article is about unemployment in the U.S. To read more about unemployment in other countries, see Unemployment (disambiguation).

Unemployment and employment are closely watched economic indicators. A low rate of unemployment often raises inflation fears, due to potential labor shortages. High unemployment raises fears of recession. Strong job growth means prosperity. Job losses, recession. The chart to the right shows the annual unemployment rate from 1948 through 2007.

In looking at unemployment and employment there is ample room for confusion. Two separate and distinct measures of unemployment are often reported in the media, as well as two separate and distinct measures of employment. Each indicator has value, but must be understood correctly. All four are reported by the Bureau of Labor Statistics (BLS).

Unemployment

  • The “Unemployment Insurance Weekly Claims Report” is often cited in the press, with a focus on “initial claims” for benefits. An increase or decrease is popularly taken as a portent of the direction of the economy. A seasonally adjusted insured unemployment rate is also reported weekly. This measure of unemployment is not equivalent to the unemployment rate that is reported on a monthly basis by the BLS for several reasons: (1) Not all persons are covered by Federal or State unemployment insurance programs. (2) Some who are covered don’t file claims. (3) Some are still unemployed when their benefits run out and they drop out of the program.
  • A broader unemployment rate is estimated on a monthly basis by the BLS. The data that form the basis for the unemployment rate are gathered through a monthly survey of 60,000 households. This is called the Current Population Survey (CPS). The reference period is the week that includes the 12th day of the month. This is the unemployment rate that is used when economists and market analysis look at trends over time. Note that both measures of unemployment are revised annually, resulting in changes in previously reported unemployment rates.

Definitions and Discussion

The unemployed are defined by the BLS as “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.”

The unemployment rate is the number of unemployed as a percent of the labor force. The labor force consists of employed and unemployed persons. It is sometimes called the “civilian labor force” because it excludes people in the armed forces.

The size of the labor force varies over time due to economic conditions and changes in the number of working age people. When the economy is strong more people are apt to look for work and the size of the labor force swells. This could drive up the unemployment rate even when employment is growing. On the other hand, when jobs are scarce some people give up looking for work, which can result in a decline in the unemployment rate even as the economy weakens.

As the Baby Boom generation retires the size of the labor force might shrink, although a strong flow of young people into the labor force (the “Echo Boom” generation) and immigrants have the potential to keep the size of the labor force high enough. Many Baby Boomers may also delay the age at which they retire.

Illegal immigration is a complicating factor in the estimation of the number of employed and unemployed in this country. This “shadow labor force” is not well accounted for.

Employment

  • In the CPS (the survey of 60,000 households) 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. The employed include paid employees and those who work in their own business
  • The BLS also conducts the Current Employment Statistics (CES) survey of 390,000 business establishments. It yields a detailed breakdown of employment, hours and earnings for all major industrial sectors (except agriculture) and subgroups each month. When analysts talk about change in manufacturing jobs, for example, they are referring to the CES survey. The CES says nothing about unemployment.

The two surveys show different levels of employment and employment growth and have on occasion been contradictory due to the different samples and survey methodologies.

Unemployment Rate Since 1948
Unemployment Rate Since 1948
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