How is the National Unemployment Rate Calculated?
In a week or so the new unemployment rate numbers should be out, revealing the current state of the employment situation in the United States. Do you ever find yourself wondering exactly how the government arrives at these numbers? According to popular opinion, these numbers would seem to be derived from the number of individuals who file claims for unemployment insurance benefits under either State or Federal programs. This actually, not quite accurate; however, due to the fact that these numbers would not include those individuals who are without jobs but whose benefits have run out or who were not eligible for some reason for benefits.
The unemployment rate figures which are published on a monthly basis are actually derived from a monthly survey of 60,000 households in the United States known as the Current Population Survey. The survey is conducted by the Census Bureau on behalf of the Bureau of Labor Statistics.
While 60,000 households may not seem like a lot in comparison to the millions of households in the United States, the survey is intended to be a representative of the complete population of the U.S. A sample of the more than 3,000 counties across the nation is selected toward this purpose, comprising both rural and urban areas as well as various geographic regions. 25% of the households in the sample are changed on a monthly basis for the specific purpose that no household in the sample will be interviewed more than four times consecutively. After a household is rotated out of the survey, it is not interviewed again for 8 months.
Questions are posed to the individuals surveyed regarding whether individuals in the home have a job or if they are laid off. Other questions query whether the persons are available for work and the techniques they have used to look for work in the preceding month. These questions are posed because only those individuals which do not have a job, have actively look for work in the past four weeks and who are currently available to work are considered to be unemployed. That information is then compared as a percentage to the number of people in the labor force. It should be noted that the labor force is considered to be all individuals who are age 16 and older who either have a job or who are actively looking for a job. Individuals who do not have a job and who are not actively looking for work are not included in the labor force.
The information that is collected in the survey is adjusted to account for independent population estimates across the entire nation. These adjustments take into account factors such as state of residence, sex, age and race. Despite the adjustments; however, it is important to note that because the survey is not a complete count, the results of the sample cannot be expected to be the same as if a survey of the entire population were taken. The margin of error between the sample and the actual unemployment rate; however, is believed to minimal.
The data that is collected is then released on the first Friday of each month by the Bureau of Labor Statistics as a national unemployment rate.
The unemployment rate figures which are published on a monthly basis are actually derived from a monthly survey of 60,000 households in the United States known as the Current Population Survey. The survey is conducted by the Census Bureau on behalf of the Bureau of Labor Statistics.
While 60,000 households may not seem like a lot in comparison to the millions of households in the United States, the survey is intended to be a representative of the complete population of the U.S. A sample of the more than 3,000 counties across the nation is selected toward this purpose, comprising both rural and urban areas as well as various geographic regions. 25% of the households in the sample are changed on a monthly basis for the specific purpose that no household in the sample will be interviewed more than four times consecutively. After a household is rotated out of the survey, it is not interviewed again for 8 months.
Questions are posed to the individuals surveyed regarding whether individuals in the home have a job or if they are laid off. Other questions query whether the persons are available for work and the techniques they have used to look for work in the preceding month. These questions are posed because only those individuals which do not have a job, have actively look for work in the past four weeks and who are currently available to work are considered to be unemployed. That information is then compared as a percentage to the number of people in the labor force. It should be noted that the labor force is considered to be all individuals who are age 16 and older who either have a job or who are actively looking for a job. Individuals who do not have a job and who are not actively looking for work are not included in the labor force.
The information that is collected in the survey is adjusted to account for independent population estimates across the entire nation. These adjustments take into account factors such as state of residence, sex, age and race. Despite the adjustments; however, it is important to note that because the survey is not a complete count, the results of the sample cannot be expected to be the same as if a survey of the entire population were taken. The margin of error between the sample and the actual unemployment rate; however, is believed to minimal.
The data that is collected is then released on the first Friday of each month by the Bureau of Labor Statistics as a national unemployment rate.
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