Are Unemployment Rates Really Going Down?

Posted on March 2, 2011 by

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Bureau of Labor Statistics (BLS)

AOL’s Al Lee explains why the unemployment rate isn’t always accurate in Are Unemployment Rates Really Going Down?

The unemployment rate is a complicated calculation, and it gets more complicated during times of economic turmoil. This is because the Bureau of Labor Statistics, which calculates the unemployment rate, makes certain assumptions about the number of working-age people in the economy during certain seasons of the year and creates a “seasonally adjusted” number. That’s the one you hear about in the news.

But, this adjustment may not be as accurate when the economy is struggling.

These adjustments can help keep the statistics in perspective, but they are harder to make during a recession.  The result is that the January reports may not provide a clear picture of how the employment situation is really faring.

Where does the unemployment rate data come from?

Each month the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor – the principal Federal agency responsible for measuring labor market activity, working conditions, and price changes in the economy – releases monthly employment estimates for over 1,000 industries, including the official unemployment rate.

This data influences many aspects of American lives. For example, the Consumer Price Index is used to adjust Social Security payments and Federal income tax brackets, and the Employment Cost Index is used to adjust millions of dollars in Medicare reimbursements. Several national data series, including employment, unemployment, and productivity, are used by policymakers to track the state of the economy and to drive changes in economic policy, while local unemployment data are inputs to formulas used to distribute job training resources. Trends on worker pay, health insurance, and retirement benefits have influenced legislation, while workplace injury data have led to new safety regulations.

The data comes from a monthly sample survey called the Current Population Survey (CPS).  The CPS has been conducted in the United States every month since 1940, when it began as a Work Projects Administration project. The results are considered indicators of current economic trends.

The unemployment rate is not based on the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs.

What are the real unemployment numbers?

It is quite obvious to anyone currently unemployed and searching for work that the BLS data does not reflect the severity of the job crisis.  Shadow Government Statistics, a site that exposes and analyzes flaws in current U.S. government economic data and reporting, offers a different perspective on the current unemployment situation.

When is the BLS data updated next?

The February BLS Employment Situation data will be released on Friday, March 4, 2011, at 8:30 a.m. (EST). The BLS Job Openings and Labor Turnover Survey results for January 2011 are scheduled to be released on Friday, March 11, 2011 at 10:00 a.m.(EST).  Help the 99ers Statpack does an extremely good job of extracting and presenting the unemployment data of interest to 99ers.

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