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How the National Unemployment Rate is Determined… Most People DO NOT Know This

Updated on September 2, 2011

Calculating the National Unemployment Rate

Have you ever read a story about Unemployment in the National Media and thought to yourself “No way there has to be more unemployed people than that… those numbers are bogus”? Of course you have. No matter what you read it always seems like the Unemployment rates are “Sugar Coated” and there is no way they can be that low. You have friends perhaps or even yourself who have been unemployed for months if not years. You hear about the Unemployment rate then you read comments about the “REAL UNEMPLOYMENT RATE”.

Well folks you are in for a big surprise about Unemployment Rate Calculations.

“Despite the lack of employment growth, the jobless rate held steady at 9.1 percent in August. The unemployment rate is derived from a separate survey of households, which showed an increase in employment and a tick up in the labor force participation rate.”

That’s right Unemployment rates are determined from Surveys! Astounding. But they actually take a sample pool of people and ask them if they are employed. So much for keeping records. DID YOU ACTUALLY THINK THE GOVERNMENT COULD KEEP RECORDS ACCURATE ENOUGH TO DETERMINE A REAL RATE OF UNEMPLOYMENT? Of course not. The Government sent out Census takers last year to count every person in the USA and they asked all kinds of personal questions. The Government wants to know everything about you… but they can’t even keep track of a REAL RATE OF UNEMPLOYMENT.

Here is How Unemployment Rates Are Calculated.

Before I get started you can also read the full text for yourself at the US Government Bureau of Labor Statistics Website.

http://www.bls.gov/cps/cps_htgm.htm

“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.”

Astounding isn’t it. A MONTHLY SAMPLE SURVEY determines the Rate of Unemployment!

There are about 60,000 households in the sample for this survey. This translates into approximately 110,000 individuals, a large sample compared to public opinion surveys which usually cover fewer than 2,000 people. The CPS sample is selected so as to be representative of the entire population of the United States.is selected so as to be representative of the entire population of the United States.

I read that last line a couple of times and then just shook my head a few times. Seriously… “Representative of the entire population”. Uh huh. And how exactly would one ever be able to do such a thing with unemployment swings that are so drastic from place to place.

Here is What You Need to Ask about this Crazy Approach to National Unemployment Numbers

How many people are going to be truthful with a Government Person over the Telephone? Here is the actual list of questions asked:

  1. Does anyone in this household have a business or a farm?

THIS LINE HERE TO PREVENT HUBPAGES FROM FLAGGING AS DUPLICATE CONTENT THIS LIST OF QUESTIONS.

  1. 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:
  2. 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:
  3. 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.

THIS LINE HERE TO PREVENT HUBPAGES FROM FLAGGING AS DUPLICATE CONTENT THIS LIST OF QUESTIONS.

  1. LAST WEEK, were you on layoff from a job?
  2. 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:

THIS LINE HERE TO PREVENT HUBPAGES FROM FLAGGING AS DUPLICATE CONTENT THIS LIST OF QUESTIONS.

  1. Has your employer given you a date to return to work?
    and, if "no,"
  2. 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 or 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:

THIS LINE HERE TO PREVENT HUBPAGES FROM FLAGGING AS DUPLICATE CONTENT THIS LIST OF QUESTIONS.

  1. Have you been doing anything to find work during the last 4 weeks?
    For those who say "yes," the next question is:
  2. 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:

THIS LINE HERE TO PREVENT HUBPAGES FROM FLAGGING AS DUPLICATE CONTENT THIS LIST OF QUESTIONS.

  1. 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 or she is considered to be not only looking but also available for work and is counted as unemployed.

But this is how it is done. And now you know WHY when you read the Sugar Coated unemployment numbers reported by the National Media… that they are useless fiction.

Can the Government do anything with any amount of Accuracy? And we wonder why Congress and the President are not making any progress?

National Unemployment Rate

Generic Representation of National Unemployment Rate
Generic Representation of National Unemployment Rate

Comments

Submit a Comment

  • Glenn Stok profile image

    Glenn Stok 

    7 years ago from Long Island, NY

    I knew that the unemployment statistics were figured based on people who actually apply for benefits. And I always realized that this is way off since many people don't apply, or their benefits ran out and they remain unemployed.

    But I never knew about the surveys until reading your Hub. I have to agree with you that these surveys are inaccurate and useless because of the differences from one area to the next. But that's the nature of surveys.

    I think the government can make things simple by calculating the unemployment statistics from tax returns. If someone had a W-2 one year and no W-2 the next, then count them as unemployed. Unless their tax return shows a Subchapter S or LLC, in which case they are working. I think that would not only be more accurate, but it will save taxpayer money used for doing all those surveys!

    Your Hub was very enlightening and gave me a lot to think about. Voted up.

  • sheila b. profile image

    sheila b. 

    7 years ago

    Wow! Great title, it really intrigued me. And no, I certainly didn't expect the answer you found! Great work!

  • CWanamaker profile image

    CWanamaker 

    7 years ago from Arizona

    Very interesting. The government is extrapolating and making their best estimate.... This is similar to how TV ratings are calculated. Great information.

working

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