NCPA - National Center for Policy Analysis

How Do Jobs Numbers Work?

August 15, 2011

Americans are intensely interested in the state of the job market but trying to get a good sense of it is difficult.  Without attempting a tusk-to-tail description of job statistics, here is a rough guide to the much-discussed numbers, says Philip I. Levy, a resident scholar of the American Enterprise Institute.

How is the job market doing, anyway?

  • The latest figure for the first number shows 117,000 net new jobs in July; it comes from a monthly "Current Employment Statistics" survey of approximately 140,000 employers and their hiring.
  • The second number shows unemployment decreased to 9.1 percent; it comes from the monthly Current Population Survey, a sample of 60,000 households.

Why do some people say the unemployment rate paints too rosy a picture?

  • The two big numbers are just crude summaries of a more complicated situation.
  • For example, suppose someone would like to be working 40 hours per week, but can only find part-time work (say 20). Does he have a job? Yes. Is he unemployed? No.

Is it really one big labor market, from data engineers to short-order cooks?

  • No, those workers are not interchangeable. Nor does a job in Oregon necessarily do much for a high school graduate in North Carolina.
  • The job numbers capture some of this, but not all.

What if you had a really big data set of employers and job seekers?  Could you get a better picture?

  • Probably, but there would be some pitfalls to watch out for. Those big numbers are not seasonally adjusted, while the headline payroll employment number of 117,000 is.
  • Seasonal adjustment helps answer whether the job market is doing better or worse than we would expect.

Are these government surveys the only measure of the labor market?

  • No. There are a number of other measures and reports out there: mass layoffs; first-time claims for unemployment benefits; Challenger, Gray & Christmas's job cuts.
  • Each of these provides a different look at how workers are leaving their jobs.

Source: Philip I. Levy, "How Do Jobs Numbers Work?" American Enterprise Institute, August 9, 2011.

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