See How the Government Measures Unemployment and the BLS Handbook of Methods, Chapter 1, Labor Force Data Derived from the Current Population Survey, for more detailed information.
Government statistics tell us about the extent and nature of unemployment. How many people are unemployed? How did they become unemployed? How long have they been unemployed? Are their numbers growing or declining? Are they men or women? Are they young or old? Are they white or black or of Hispanic ethnicity? Are they skilled or unskilled? Are they the sole support of their families, or do other family members have jobs? Are they more concentrated in one area of the country than another? After these statistics are obtained, they have to be interpreted properly so they can be used—together with other economic data—by policymakers in making decisions as to whether measures should be taken to influence the future course of the economy or to aid those affected by joblessness.
Because unemployment insurance records relate only to persons who have applied for such benefits, and because it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940 when it began as a Work Projects Administration program. It has been expanded and modified several times since then.
The basic concepts involved in identifying the employed and unemployed are quite simple:
Employed persons consist of:
Not all of the wide range of job situations in the American economy fit neatly into a given category. For example, people are considered employed if they did any work at all for pay or profit during the survey reference week. This includes all part-time and temporary work, as well as regular full-time, year-round employment. Persons also are counted as employed if they have a job at which they did not work during the survey week because they were:
Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.
Workers expecting to be recalled from layoff are counted as unemployed, whether or not they have engaged in a specific jobseeking activity. In all other cases, the individual must have been engaged in at least one active job search activity in the 4 weeks preceding the interview and be available for work (except for temporary illness).
Persons not in the labor force are those who are not classified as employed or unemployed during the survey reference week.
Labor force measures are based on the civilian noninstitutional population 16 years old and over. (Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces.) The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force." Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.
When the population is classified according to who is employed, unemployed, and not in the labor force on the basis of their activities during a given calendar week, situations are often encountered where individuals have engaged in more than one activity. Because persons are counted only once, it must be decided which activity will determine their status. Therefore, a system of priorities is used:
The labor force is not a fixed number of people. It increases with the long-term growth of the population, it responds to economic forces and social trends, and its size changes with the seasons. On average in 2008, there were roughly 145 million employed and 9 million unemployed making up a labor force of 154 million persons. There were about 80 million persons not in the labor force.
The seasonal fluctuations in the number of employed and unemployed persons reflect not only the normal seasonal weather patterns that tend to be repeated year after year, but also the hiring (and layoff) patterns that accompany regular events such as the winter holiday season and the summer vacation season. These variations make it difficult to tell whether month-to-month changes in employment and unemployment are due to normal seasonal patterns or to changing economic conditions. To deal with such problems, a statistical technique called seasonal adjustment is used.
When a statistical series has been seasonally adjusted, the normal seasonal fluctuations are smoothed out and data for any month can be more meaningfully compared with data from any other month or with an annual average. Many time series that are based on monthly data are seasonally adjusted.
The UI figures are not produced by the Bureau of Labor Statistics. Statistics on insured unemployment in the United States are collected as a by-product of UI programs. Workers who lose their jobs and are covered by these programs typically file claims ("initial claims") that serve as notice that they are beginning a period of unemployment. Claimants who qualify for benefits are counted in the insured unemployment figures (as "continued claims"). Data on UI claims are maintained by the Employment and Training Administration, an agency of the U.S. Department of Labor, and are available on the Internet at: http://workforcesecurity.doleta.gov/unemploy/claims.asp.
These data are not used to measure total unemployment because they exclude several important groups. To begin with, not all workers are covered by UI programs. For example, self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several other small (primarily seasonal) worker categories are not covered. In addition, the insured unemployed exclude the following:
See the Local Area Unemployment Statistics Frequently Asked Questions page.
Because of the difficulty of developing an objective set of criteria which could be readily used in a monthly household survey, no official government statistics are available on the total number of persons who might be viewed as underemployed. Even if many or most could be identified, it would still be difficult to quantify the loss to the economy of such underemployment.
The concepts and definitions underlying the labor force data have been modified, but not substantially altered, even though they have been under almost continuous review by interagency governmental groups, congressional committees, and private groups since the inception of the Current Population Survey.
In January 1994, a major redesign of the Current Population Survey was introduced which included a complete revamping of the questionnaire, the use of computer-assisted interviewing for the entire survey, and revisions to some of the labor force concepts.
The sample survey system of counting the unemployed in the United States is also used by many foreign countries, including Canada, Mexico, Australia, Japan, and all of the countries in the European Economic Community. More recently, a number of East European nations have instituted labor force surveys as well. However, some countries collect their official statistics on the unemployed from employment office registrations or unemployment insurance records. Many nations, including the United States, use both labor force survey data and administrative statistics to analyze unemployment.
The International Labor Comparisons program of the Bureau of Labor Statistics adjusts foreign unemployment rates to U.S. concepts. Comparative labor force statistics tables showing annual averages from 1960 onward, as well as monthly estimates of unemployment rates approximating U.S. concepts for selected countries, are available.
The ACS is a household survey developed by the Census Bureau to replace the long form of the decennial census program. For more information, see http://www.bls.gov/lau/acsqa.htm.
Last Modified Date: April 18, 2011