How the Government Measures Unemployment

by Admin 1. March 2010

Where do the statistics come from?

Early each month, the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor announces the total number of employed and unemployed persons in the United States for the previous month, along with many characteristics of such persons.

The Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. There are about 60,000 households in the sample for this survey.

Each month, 2,200 Census Bureau employees interview persons in the sample households for information on the labor force activities (jobholding and jobseeking) or non-labor force status of the members of these households during the survey reference week. This information relates to all household members 15 years of age and over. Each person is classified according to the activities he or she engaged in during the reference week.

What are the basic concepts of employment and unemployment?

In identifying the employed and unemployed the sample survey respondents are classified as follows:

People with jobs are employed.
People who are jobless, looking for jobs, and available for work are unemployed.
People who are neither employed nor unemployed are not in the labor force

Who is counted as employed?

People are considered employed if they did any work at all for pay or profit during the survey week. This includes all part-time and temporary work, as well as regular full-time, year-round employment.

Who is counted as unemployed?

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.

The total unemployment figures cover more than the number of persons who have lost jobs. It includes persons who have quit their jobs to look for other employment, workers whose temporary jobs have ended, persons looking for their first jobs, and experienced workers looking for jobs after an absence from the labor force.

Who is not in the labor force?

Labor force measures are based on the civilian noninstitutional population 16 years old and over. The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force." Many who are not in the labor force are going to school or are retired.

Persons who are not in the labor force but are considered to be "marginally attached to the labor force" are those who are not currently looking for work (and therefore are not counted as unemployed), but who nevertheless have demonstrated some degree

of labor force attachment. Specifically, to be counted as "marginally attached to the labor force," individuals must indicate that they currently want a job, have looked for work in the last 12 months (or since they last worked if they worked within the last 12 months), and are available for work. "Discouraged workers" are a subset of the marginally attached.

How are seasonal fluctuations taken into account?

Seasonal fluctuations in the number of employed and unemployed persons reflect not only the normal seasonal weather patterns that tend to be repeated year after year, but also the hiring (and layoff) patterns that accompany regular events such as the winter holiday season and the summer vacation season. These variations make it difficult to tell whether month-to-month changes in employment and unemployment are due to normal seasonal patterns or to changing economic conditions. To deal with such problems, a seasonal adjustment factor is then developed and applied to the estimates to eliminate the effects of regular seasonal fluctuations on the data. The normal seasonal fluctuations are smoothed out and data for any month can be more meaningfully compared with data from any other month or with an annual average.

What do the unemployment insurance (UI) figures measure?

Statistics on insured unemployment in the United States are collected as a by-product of unemployment insurance (UI) programs. Workers who lose their jobs and are covered by these programs typically file claims ("initial claims") that serve as notice that they are beginning a period of unemployment. Data on UI claims are maintained by the Employment and Training Administration, an agency of the U.S. Department of Labor, not the Bureau of Labor Statistics

While some countries base their estimates of total unemployment on the number of persons filing claims for or receiving UI payments, in the United States UI figures are not used to measure total unemployment because they exclude several important groups. To begin with, not all workers are covered by UI programs. Self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several other small (primarily seasonal) worker categories are not covered.

Labor Force Statistics from the Current Population Survey

Series Id: LNS14000000
Seasonally Adjusted
Series title: (Seas) Unemployment Rate
Labor force status: Unemployment rate
Type of data: Percent or rate
Age: 16 years and over

Source: Bureau of Labor Statistics; Last Date Modifies October 16, 2009

Alternative Measures of the Unemployment Rate

Source: Federal Reserve Bank of Cleveland
Murat Tasci and Beth Mowry, October 7, 2009

The civilian labor force is the sum of the employed and unemployed, excluding people in the armed forces, institutionalized people such as prison inmates, and anyone under 16 years old.

The official definition of unemployment includes those who are able to work, available for work, and actively seeking work but are not currently employed. Excluded are marginally-attached workers—those who are available for and would take a job if offered but have not been looking recently—and involuntary part-time workers—those who would prefer full-time work but are instead stuck working part-time. Since these groups can provide important information about labor market slack or underutilization, the BLS publishes numerous alternative measures of unemployment in addition to the official rate each month. The alternatives range from less-inclusive to most inclusive.


Beyond the official rate, U-4 adds discouraged workers, a subset of the marginally attached, who have given up searching for jobs because they believe none are available. U-5 adds all marginally-attached workers, or those who recently have given up the job search for a range of reasons extending beyond discouragement. The broadest measure of labor underutilization, U-6, includes people working part-time who would really like to have full-time jobs. These “underemployed” people may have had their hours cut back by employers, or perhaps they were looking for full-time work and had to settle for part-time.

Alternative Measures of Labor Underutilization

Measure Current recession 2001 recession
Dec 2007
Sept 2009
Difference Mar 2001
Nov 2001
U-3: The official unemployment rate. Total unemployed persons as a percent of the civilian labor force. 4.9 9.8 4.9 4.3 5.5 1.2
U-4: U-3 + discouraged workers 5.1 10.2 5.1 4.5 5.8 1.3
U-5: U-3 + All marginally attached workers 5.7 11.1 5.4 5.0 6.4 1.4
U-6: U-5 + Persons employed part-time for economic reasons 8.7 17.0 8.3 7.3 9.4 2.1

Note: Differences are given in percentage points.
Source: Bureau of Labor Statistics, Current Population Survey.

The more inclusive the measure, from U-3 to U-6, the higher the corresponding unemployment rate is. During the course of the current recession, the official rate has risen 4.9 percentage points to 9.8 percent, its highest level since June 1983. Meanwhile, U-4 has risen 5.1 percentage points to 10.2 percent, U-5 has bumped up 5.4 points to 11.1 percent, and U-6 presently sits at a whopping 17.0 percent, up 8.3 percentage points since December 2007.

A U-6 rate of 17.0 percent implies a considerable amount of labor market slack, or underutilized potential labor resources. Although the various rates sit at different levels, they track each other closely over time. In other words, the trends have generally been consistent over the past 15 years of the alternative measures’ existence. The official rate rises in recessions and declines afterward, as do the others.


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