A Project of The Annenberg Public Policy Center

Jobless Rate and Unemployment Benefits


Q: Does the official jobless rate fail to count people who have no unemployment benefits?

A: They are counted, too. The rate is based on a huge survey and counts those who are out of work whether they get benefits or not.

FULL QUESTION

In the past I’ve heard that unemployment figures only include the percentage of adults that are currently receiving unemployment benefits. Is this (still) the case?

If so, why are we not hearing more about the percentage of unemployed adults who no longer qualify for benefits because they’ve been unemployed too long or have maxed out their benefits? It seems completely inaccurate to say that unemployment is low if this is the case.

FULL ANSWER

We get this a lot, and you are right to be skeptical. It’s a common misconception that only those who are getting unemployment benefits are counted. If that were the case the official rate would look a lot lower than it really is, and that’s exactly why the Bureau of Labor Statistics doesn’t do it that way.

The official unemployment figures put out each month by BLS are actually based on a huge survey. The BLS explains it pretty clearly:

BLS: Because unemployment insurance records, which many people think are the source of total unemployment data, 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.

The survey is called the Current Population Survey and it includes about 60,000 households each month, chosen at random. That’s hundreds of times larger than the usual size of a sample for a national public opinion poll. It is conducted for BLS by the Census Bureau.

Who’s "Unemployed?"

Whether the unemployment rate misses people who have been out of work for a long time depends on how you look at it and who you count as "unemployed." Naturally enough, the BLS doesn’t consider school children, retired persons, prison inmates or stay-at-home spouses to be unemployed just because they don’t have payroll jobs. Persons under 16 are not counted at all. So a person who is not employed isn’t necessarily counted as "unemployed."

Officially, the BLS counts a person as "unemployed" if they are out of work and say they are available for work and also say they have looked for work at least once in the past four weeks. That rule applies whether or not the person is getting unemployment benefits. Many who are counted, in fact, never qualified for benefits in the first place. They might have just graduated from school or worked in a job that wasn’t covered or, as this question suggests, have been out of work so long that benefits ran out.

Not counted, however, are those who have simply given up looking for work. These can include persons who might look for work if jobs were more plentiful or if better jobs were available. The unemployment rate would be higher if such persons were counted. To gauge such factors, each month the BLS furnishes what it calls "alternative measures of labor underutilization" as a table accompanying its release of the unemployment figures.

Besides those counted as "unemployed," the BLS also counts "marginally attached workers," who are persons who say they would work and have looked for work in the past year, but not in the past four weeks. Within that group is a smaller set of "discouraged" workers, who say the reason they have given up looking is that they believe there are no jobs available or none for which they would qualify. BLS also keeps track of those who say they want full-time work but have had to settle for a part-time schedule. These are called "part-time for economic reasons" (sometimes called "under-employed") to distinguish them from part-timers who prefer not to work full time.

Here are the various rates for January 2008:

  • Official unemployment rate: 4.9%
  • Rate counting "discouraged workers:"  5.2%
  • Rate counting all "marginally attached workers:" 6.0%
  • Rate counting above, plus "part time for economic reasons:"  9.0%

Brooks Jackson

Sources

U.S. Department of Labor Bureau of Labor Statistics. Current Population Survey. Frequently Asked Questions, accessed 30 Jan. 2008.

U.S. Department of Labor Bureau of Labor Statistics. Employment Situation, "Table A-12. Alternative measures of labor underutilization," accessed 1 Feb. 2008.

U.S. Department of Labor Bureau of Labor Statistics. "BLS Glossary," accessed 30 Jan. 2008.