Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

How the government measures unemployment
Bureau of Labor Statistics, Department of Labor ^

Posted on 07/11/2003 7:02:51 AM PDT by Dave S

Where do the statistics come from?

Early each month, the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor announces the total number of employed and unemployed persons in the United States for the previous month, along with many characteristics of such persons. These figures, particularly the unemployment rate--which tells you the percent of the labor force that is unemployed--receive wide coverage in the press, on radio, and on television.

Some people think that to get these figures on unemployment the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs. But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed.

Other people think that the Government counts every unemployed person each month. To do this, every home in the country would have to be contacted--just as in the population census every 10 years. This procedure would cost way too much and take far too long. Besides, people would soon grow tired of having a census taker come to their homes every month, year after year, to ask about job-related activities.

Because unemployment insurance records relate only to persons who have applied for such benefits, and since 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 project. It has been expanded and modified several times since then. As explained later, the CPS estimates, beginning in 1994, reflect the results of a major redesign of the survey.

There are about 60,000 households in the sample for this survey. The sample is selected so as to be representative of the entire population of the United States. In order to select the sample, first, the 3,141 counties and county-equivalent cities in the country are grouped into 1,973 geographic areas. The Bureau of the Census then designs and selects a sample consisting of 754 of these geographic areas to represent each State and the District of Columbia. The sample is a State-based design and reflects urban and rural areas, different types of industrial and farming areas, and the major geographic divisions of each State.

Each of the 754 areas in the sample is subdivided into enumeration districts of about 300 households. The enumeration districts, in turn, are divided into smaller clusters of about four dwelling units each, through the use of address lists, detailed maps, and other sources. Then, the clusters to be surveyed are chosen statistically, and the households in these clusters are interviewed.

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.

Each month, 1,500 highly trained and experienced Census Bureau employees interview persons in the 60,000 sample households for information on the labor force activities (jobholding and jobseeking) or non-labor force status of the members of these households during the week that includes the 12th of the month (the reference week). This information, relating to all household members 16 years of age and over, is entered by the interviewers into laptop computers; at the end of each day's interviewing, the data collected are transmitted to the Census Bureau's central computer in Washington, D.C. In addition, a portion of the sample is interviewed by phone through two central data collection facilities. (Prior to 1994, the interviews were conducted using a paper questionnaire which had to be mailed in by the interviewers each month.)

Each person is classified according to the activities he/she engaged in during the reference week. Then, the total numbers are "weighted," or adjusted to independent population estimates (based on updated decennial census results). The weighting takes into account the age, sex, race, Hispanic origin, and State of residence of the population, so that these characteristics are reflected in the proper proportions in the final estimates.

A sample is not a total count and the survey may not produce the same results that would be obtained from interviewing the entire population. But the chances are 90 out of 100 that the monthly estimate of unemployment from the sample is within about 230,000 of the figure obtainable from a total census. Since monthly unemployment totals have ranged between about 5 and 8 million in recent years, the possible error resulting from sampling is not large enough to distort the total unemployment picture.

Because these interviews are the basic source of data for total unemployment, information must be factual and correct. Respondents are never asked specifically if they are unemployed, nor are they given an opportunity to decide their own labor force status. Unless they already know how the Government defines unemployment, many of them may not be sure of their actual classification when the interview is completed.

Similarly, interviewers do not decide the respondents' labor force classification. They simply ask the questions in the prescribed way and record the answers. Individuals are then classified as employed or unemployed by the computer based on the information collected and the definitions programmed into the computer.

All interviews must follow the same procedures to obtain comparable results. Because of the crucial role interviewers have in the household survey, a great amount of time and effort is spent maintaining the quality of their work. Interviewers are given intensive training, including classroom lectures, discussion, practice, observation, home-study materials, and on-the-job training. At least once a year, they convene for day-long training and review sessions, and, also at least once a year, they are accompanied by a supervisor during a full day of interviewing to determine how well they carry out their assignments.

A selected number of households are reinterviewed each month to determine whether the information obtained in the first interview was correct. The information gained from these reinterviews is used to improve the entire training program.

What are the basic concepts of employment and unemployment?

The basic concepts involved in identifying the employed and unemployed are quite simple:

The survey is designed so that each person age 16 and over who is not in an institution such as a prison or mental hospital or on active duty in the Armed Forces is counted and classified in only one group. The sum of the employed and the unemployed constitutes the civilian labor force. Persons not in the labor force combined with those in the civilian labor force constitute the civilian noninstitutional population 16 years of age and over. Under these concepts, most people are quite easily classified. For example:

Elizabeth Lloyd reported to the interviewer that last week she worked 40 hours as a sales manager for the Western Beverage Company.

Steve Hogan lost his job when the local plant of the Chariot Aircraft Manufacturing Company was closed down. Since then, he has been visiting the personnel offices of the other factories in the town trying to find a job.

Linda Coleman is a homemaker. Last week, she was occupied with her normal household chores. She neither held a job nor looked for a job. Her 80-year old father who lives with her has not worked or looked for work because of a disability.

Each of these examples is clear cut. Elizabeth is employed; Steve is unemployed; and Linda and her father are not in the labor force.

Who is counted as employed?

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 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:

These persons are counted among the employed and tabulated separately as "with a job but not at work," because they have a specific job to which they will return.

But what about the two following cases? George Lewis is 16 years old, and he has no job from which he receives any pay or profit. However, George does help with the regular chores around his father's farm about 20 hours each week.

Lisa Fox spends most of her time taking care of her home and children, but, all day Friday and Saturday, she helps in her husband's computer software store.

Under the Government's definition of employment, both George and Lisa are considered employed. They fall into a group called "unpaid family workers," which includes any person who worked 15 hours or more in a week without pay in a family-operated enterprise. Such persons contribute significantly to our productive effort and are an important part of our labor supply, particularly in agriculture and retail trade. However, unpaid family workers who work fewer than 15 hours per week are counted as "not in the labor force."

Who is counted as unemployed?

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. Actively looking for work may consist of any of the following activities:


Passive methods of jobsearch do not result in jobseekers actually contacting potential employers, and therefore are not acceptable for classifying persons as unemployed. These would include such things as attending a job training program or course or merely reading the want ads.

Workers expecting to be recalled from layoff are counted as unemployed, whether or not they have engaged in a specific jobseeking activity. But, in all other cases, the individual must be actively engaged in some job search activity and available for work (except for temporary illness).

The questions used in the interviews are carefully designed to elicit the most accurate picture of each person's labor force activities. Some of the major questions that determine employment status are: (The capitalized words are emphasized when read by the interviewers.) 1. Does anyone in this household have a business or farm? 2. LAST WEEK, did you do ANY work for (either) pay (or profit)? If the answer to question 1 is "yes" and the answer to question 2 is "no," the next question is: 3. LAST WEEK, did you do any unpaid work in the family business or farm? For those who reply "no" to both questions 2 and 3, the next key questions used to determine employment status are: 4. LAST WEEK, (in addition to the business,) did you have a job either full or part time? Include any job from which you were temporarily absent. and 5. LAST WEEK, were you on layoff from a job? and 6. What was the main reason you were absent from work LAST WEEK? For those who respond "yes" to question 5 about being on layoff, the following questions are asked: 7. Has your employer given you a date to return to work? and, if "no," 8. Have you been given any indication that you will be recalled to work within the next 6 months? If the responses to either question 7 or 8 indicate that the person expects to be recalled from layoff, he/she is counted as unemployed. For those who were reported as having no job or business from which they were absent or on layoff, the next question is: 9. Have you been doing anything to find work during the last 4 weeks? For those who say "yes," the next question is: 10. What are all of the things you have done to find work during the last 4 weeks? If an active method of looking for work, such as those listed at the beginning of this section, is mentioned, the following question is asked: 11. LAST WEEK, could you have started a job if one had been offered? If there is no reason, except temporary illness, that the person could not take a job, he/she is considered to be not only looking but also available for work and is counted as unemployed.

Some examples of responses that are typically given in interviews and that may result in a person being classified as unemployed are: 1. Yvonne Bennett reported that 2 weeks ago she applied for a job as a receptionist at the Capitol Travel Agency and the Equity Mortgage Lending Company. She is awaiting the results of her applications. Yvonne is unemployed because she made a specific effort to find a job within the prior 4 weeks and is presently available for work. 2. Mrs. Jenkins tells the interviewer that her daughter Katherine Marie was thinking about looking for work in the prior 4 weeks but knows of no specific efforts she has made. Katherine Marie does not meet the activity test for unemployment and is, therefore, counted as "not in the labor force." 3. Paul Flynn has been checking for openings on a bricklayer's union register for each of the past 3 weeks, but his wife reported that last week he had the flu and was unable to work because of it. Paul is counted as unemployed because he took steps to look for work in his trade and would have been available for work during the survey reference week, except for his temporary illness. 4. Marcus Green was laid off from the Hotshot Motor Company when the firm began retooling to produce a new model car. Marcus knows he will be called back to work as soon as the model changeover is completed, and he also knows it is unlikely that he would be able to find a job for the period he is laid off; so, although he is available to work, he is not seeking a job. Marcus is unemployed because he is waiting to be recalled from layoff. 5. Joan Howard told the interviewer that she has filed applications with three companies for summer jobs. However, it is only April and she doesn't wish to start work until at least June 15, because she is attending school. Although she has taken specific steps to find a job, Joan is classified as not in the labor force because she is not currently available for work. From these definitions and examples, it can be seen that the total unemployment figures cover more than the number of persons who have lost jobs. It includes persons who have quit their jobs to look for other employment, workers whose temporary jobs have ended, persons looking for their first jobs, and experienced workers looking for jobs after an absence from the labor force (as, for example, a woman who returns to the labor force after her children have entered school).

Who is not in the labor force?

Labor force measures are based on the civilian noninstitutional population 16 years old and over. Excluded are persons under 16 years of age, all inmates of institutions and persons on active duty in the Armed Forces. All other members of the civilian noninstitutional population are eligible for inclusion in the labor force, and those 16 and over who have a job or are actively looking for one are so classified. The remainder--those who have no job and are not looking for one--are counted as "not in the labor force." Many who do not participate in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force. Still others have a physical or mental disability which prevents them from participating in labor force activities.

A series of questions is asked each month of persons not in the labor force to obtain information about their desire for work, the reasons why they had not looked for work in the last 4 weeks, their prior job search, and their availability for work. These questions include: 1. Do you currently want a job, either full or part time? 2. What is the main reason you were not looking for work during the LAST 4 WEEKS? 3. Did you look for work at any time during the last 12 months? 4. LAST WEEK, could you have started a job if one had been offered?

These questions form the basis for estimating the number of persons who are not in the labor force but who are considered to be "marginally attached" to it. These are persons without jobs who are not currently looking for work (and therefore not counted as unemployed), but who nevertheless have demonstrated some degree of labor force attachment. Specifically, to be counted as "marginally attached," individuals must indicate that they currently want a job, have looked for work in the last 12 months (or since they last worked if they worked within the last 12 months), and are available for work. "Discouraged workers" are a subset of the marginally attached. "Discouraged workers" report they are not currently looking for work for at least one of 4 reasons: 1) they believe no job is available to them in their line of work or area, 2) they had previously been unable to find work, 3) they lack the necessary schooling, training, skills or experience, or 4) employers think they are too young or too old, or they face some other type of discrimination.

Additional questions about persons not in the labor force are asked during each household's last month of its 4-month tenure in the sample rotation pattern. These questions are designed to collect information about why these people left their previous jobs, when they last worked at a job or business, whether they intend to look for work in the near future, and their current situation (retired, disabled, ill, in school, taking care of house or family, or something else).

What about cases of overlap?

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. Since persons are counted only once, it must be decided which activity will determine their status. Therefore, a system of priorities is used: Labor force activities take precedence over non-labor force activities. Working or having a job takes precedence over looking for work. Some examples are: 1. James Kelly and Elyse Martin attend Jefferson High School. James works after school at the North Star Cafe, and Elyse is seeking a part-time job at the same establishment (also after school.) James' job takes precedence over his non-labor force activity of going to school, as does Elyse's search for work; therefore, James is counted as employed and Elyse is counted as unemployed. 2. Last week, Mary Davis, who was working for Stuart Comics, went to the Coastal Video Shop on her lunch hour to be interviewed for a higher paying job. Mary's interview constitutes looking for work, but her work takes priority, and she is counted as employed. (Indeed, because of the way the questionnaire is set up, information about Mary's search for work is not even obtained.) 3. John Hinton has a job at the Nuts and Bolts Company, but he didn't go to work last week because of a strike at the plant. Last Thursday, he went to the Screw and Washer Factory to see about a temporary job until the strike terminates. John was "with a job but not at work" due to an industrial dispute, which takes priority over looking for work; therefore, he is counted as employed. (Again, information would not be obtained on John's jobsearch effort.) 4. Amy Douglas lost her job at the book store on Wednesday of the survey week. She answered newspaper want-ads on Thursday and Friday but had not obtained a new job by the end of the week. Amy is counted as employed, since she was paid for the 3 days that she did work, even though she was unemployed for part of the survey week. (Once again, information would not be obtained on her search for work, though Amy would be identified as working "part time for economic reasons," by virtue of her having her workweek reduced to part time by her dismissal from her previous job.)

To summarize: Employed persons consist of:



TOPICS: Business/Economy; Culture/Society
KEYWORDS: employment; laborstatistics; unemployment
Everytime unemployment numbers are reported, there is usually a lot of discussion. Much of what is said about how these measures are obtained is just false. Since I just visited the BLS web site to get proof for a fellow freeper on how the statistics are collected, I thought there may be many others that would be interested.
1 posted on 07/11/2003 7:02:51 AM PDT by Dave S
[ Post Reply | Private Reply | View Replies]

To: Dave S
bump
2 posted on 07/11/2003 7:04:05 AM PDT by foreverfree
[ Post Reply | Private Reply | To 1 | View Replies]

To: All
"Please contribute to FreeRepublic and make these posts go away"


Donate Here By Secure Server

Or mail checks to
FreeRepublic , LLC
PO BOX 9771
FRESNO, CA 93794

or you can use

PayPal at Jimrob@psnw.com

STOP BY AND BUMP THE FUNDRAISER THREAD-
It is in the breaking news sidebar!
Thanks Registered

3 posted on 07/11/2003 7:04:57 AM PDT by Support Free Republic (Your support keeps Free Republic going strong!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Dave S
Each month, 1,500 highly trained and experienced Census Bureau employees..........

Slightly biased?????
4 posted on 07/11/2003 7:26:09 AM PDT by PeterPrinciple
[ Post Reply | Private Reply | To 1 | View Replies]

To: Dave S
Very good. Thanks.

BTW, did I miss something, or if you are "self-employed" and don't take "pay" but rather take "profits," you are not even counted as part of the labor force? You aren't "employed" and you aren't "unemployed." I looked through the "who is employed," and a self-employed person living off profits doesn't seem to fit.

5 posted on 07/11/2003 7:31:42 AM PDT by LS
[ Post Reply | Private Reply | To 1 | View Replies]

To: LS
This is a big problem. What if you are the owner and sole employee of a sub-S corp? Even if you don't currently have any contracts, you may still be paying yourself on a W2 from money you have saved up in your corp. On the other hand, if you do have a contract, it may turn out months from now that the customer won't or can't pay.
6 posted on 07/11/2003 7:39:04 AM PDT by proxy_user
[ Post Reply | Private Reply | To 5 | View Replies]

To: Dave S
This is very interesting, thanks for the post. A couple of things sort of jumped out at me. One was that the sampling method had a 90 out of 100 chance of falling within 230,000 of the actual number. That, to me, appears to be a compounded margin of error, much higher than either the "90 out of 100" or "within 230,000". I'm not a statistician, though, so what do I know?

Secondly, I can't help but think this whole "interviewing" thing is a completely outmoded and unreliable method of gathering valid data. Just as we frequently wonder why we never get polled for elections (phone calls to our homes), I'd like to know if any Freepers have been contacted by the BLS. I'd hang up on them, and I'm sure many other people who work for a living would too.

Third, how can they issue monthly stats if there is not 100% turnover in the sampled homes? Clearly, a household classified as "unemployed" would be more likely to remain in that status in consecutive months. To retain that household (or an "employed" one, for that matter) for 4 consecutive months essentially reduces the pertinent sample by 25 percent, I think.

That said, if the methodology is consistent, then I think we can still draw some conclusions regarding trends. But it appears that when it comes to hard data, we're dealing with a whole lot of ifs.

7 posted on 07/11/2003 7:41:58 AM PDT by Mr. Bird
[ Post Reply | Private Reply | To 1 | View Replies]

To: LS; Dave S
That's a good question.
Plus, what if you are a self employed person that's only doing 20 hours a week? Or you cut your rate down so that a 40 hour week pays the same as a 30 hour week?
Course that's a hard question to ask "Would you like to make more money in a week?" Gee, I wonder. Perhaps a "Are you making more or less money than you did a year ago"
8 posted on 07/11/2003 7:42:31 AM PDT by lelio
[ Post Reply | Private Reply | To 5 | View Replies]

To: LS
did I miss something, or if you are "self-employed" and don't take "pay" but rather take "profits," you are not even counted as part of the labor force? You aren't "employed" and you aren't "unemployed."

Thats my understanding. As one who is self-employed I can not be unemployed and therefore dont need to worry about things like unemployment compensation. I dont qualify. For the number of hours I put in, it makes me a little angry that they dont think Im in the workforce. :-)

9 posted on 07/11/2003 8:39:04 AM PDT by Dave S
[ Post Reply | Private Reply | To 5 | View Replies]

To: Dave S; lelio; LS
I went back and reread the document and apparently I am counted as employed if I am self employed. Definition being doing work for pay or profit.

Boy this stuff is complicated.

10 posted on 07/11/2003 8:52:31 AM PDT by Dave S
[ Post Reply | Private Reply | To 9 | View Replies]

To: Mr. Bird
While "within 230,000" may seem large, it is quite small in comparison to the total number of likely unemployed in a month or the total in the workforce which is probably more than a 100,000,000. All they are saying is that if they continually drew different samples from the same universe, 90 times out of 100, they would come up within 230,000 of the actual number. In most published political surveys the polster reports 90 or 95 times out of 100 the sample number is within three to five percentage points of the actual.

My understanding is that MOST of the interviewing is done in person by interviewers knocking on specific doors in specific communities. They probably use telephone when they have made a number of attempts in person and have not been able to reach the potential respondent. So you may hide when the interviewer knocks on your door but I dont think we are biasing the sample much by having people hang up rather than particpate.

The overlap is a slight concern. It would be better if they drew a new sample of 60,000 each and every month BUT it costs a fortune to do this survey they way it is done now. Drawing a completely new random sample of that many households each month is very costly. Very few surveys conducted by US corporations, by the media, or by politicians use a national probability sample. Most are driven more by convenience and cost. Of course the feds dont worry as much about cost, after all they can always just print some more dollars.

11 posted on 07/11/2003 9:08:06 AM PDT by Dave S
[ Post Reply | Private Reply | To 7 | View Replies]

To: Dave S
Definition being doing work for pay or profit.
As an aside, I know a lot of computer programmers around here (Seattle) that are doing work in exchange for stock options as a) startups have $0 to hire people and b) it kinda sorta still allows them to collect unemployment. Granted there is a question when you file "Did you work for any employer" which probably means they are working and thus shouldn't receive benefits.
Now would be a good time to start up my highly unscientific poll of how long it takes you to get to work related to employment rates. The lower the commute time the higher UI is. Also factor in the number of people chilling outside a coffee shop.
12 posted on 07/11/2003 9:17:05 AM PDT by lelio
[ Post Reply | Private Reply | To 10 | View Replies]

To: Dave S
That's probably what it should be, but the distinction is if you pay yourself a "wage" or if you "merely" "take profits."
13 posted on 07/11/2003 11:31:54 AM PDT by LS
[ Post Reply | Private Reply | To 10 | View Replies]

To: lelio
Or, in my case, I'm employed full time as a professor, but I have a consulting "business" that accounts for between 10-20% of my annual income. (In past years, it was much more). Am I employed by one, but not the other? Should I be DOUBLE counted?
14 posted on 07/11/2003 11:33:11 AM PDT by LS
[ Post Reply | Private Reply | To 8 | View Replies]

To: LS
BTW, did I miss something, or if you are "self-employed" and don't take "pay" but rather take "profits," you are not even counted as part of the labor force? You aren't "employed" and you aren't "unemployed." I looked through the "who is employed," and a self-employed person living off profits doesn't seem to fit.

Aw heck! I'm neither here not there, but I'm doing alright. Contracts are rolling in. I feel bad for all you present and future laid off people who won't be able to afford my services.



Hey, wait a minute!

15 posted on 07/11/2003 11:39:50 AM PDT by Jim Cane
[ Post Reply | Private Reply | To 5 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson