Focus on Economic Data: U.S. Employment and the Unemployment Rate, April 2013
This lesson printed from:
Posted May 15, 2013
Author: Douglas Haskell
Posted: May 15, 2013
This lesson examines the U.S. Department of Labor, Bureau of Labor Statistics, announcement of employment data and the unemployment rate for the month of April, 2013, reported May 3, 2013. This lesson introduces the basic concepts of the BLS employment and unemployment data. The meaning and importance of the data are discussed. Assessment exercises are included for reinforcing knowledge of the concepts.
- Review the most recently reported U.S. employment and unemployment data.
- Determine the changes in U.S. employment and unemployment from the past month and year.
- Determine the factors that have influenced the change in the U.S. unemployment rate.
- Explain the implications of the employment and unemployment data for individuals, population groups, and the U.S. economy.
Current Key Economic Indicatorsas of November 10, 2014
The Consumer Price Index for All Urban Consumers increased 0.1 percent in October on a seasonally adjusted basis. The core inflation rate increased the same amount. For the previous 12 months, the index increased 1.7%, the same rate as reported in the September report.
According to the October report of the Bureau of Labor Statistics, the unemployment rate fell from 5.9% to 5.8%, and the number of individuals unemployed also decreased. Total nonfarm employment rose by 214,000 in October. Employment gains were concentrated in retail trade, food services and health care.
The advance estimate for real GDP growth in the third quarter of 2014 was 3.5%, a decrease from the revised second quarter growth of 4.6%. Inventory investment reduced third quarter growth, while it added to second quarter growth. In addition, consumer spending increased at a lower rate in the third quarter, compared to the second. Finally, business investment increased in the third quarter, but at a lower rate than in the second quarter.
The FOMC believes that the labor market has shown considerable improvement and the risks of inflation rising above its 2% target are low. Therefore, the Federal Reserve announced plans to end its purchase of financial assets. In addition, the federal funds rate will remain at its current low level. However, the FOMC has signaled its willingness to increase the federal funds rate if inflation shows signs of rising above the 2% target.
Each month, the Bureau of Labor Statistics (BLS) releases data from the monthly "Household Survey" conducted by the Bureau of the Census, providing a comprehensive body of information on the employment and unemployment experience of the U.S. population, classified by age, sex, race, and a variety of other characteristics.
The BLS also conducts the Current Employment Statistics (CES) program, surveying about 150,000 businesses and government agencies, representing approximately 390,000 individual work sites, in order to provide detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls.
The BLS compiles information from these sources and announces the monthly "Employment Situation," reporting the current U.S. employment and unemployment data estimates. The monthly announcement reports employment data from the previous full month.
This lesson is about the BLS announcement, "Employment Situation: April 2013," reported May 3, 2013 This lesson will also look at the recent history of employment and unemployment data.
[NOTE TO TEACHER: Employment and Unemployment Rate Focus on Economic Data Schedule:
During the second half of the 2012-2013 school year, (January-May), EconEdLink will publish five Focus on Economic Data lessons on employment and the unemployment rate. During this time period, the lessons will begin with the 'basics' in January and progressively focus more on complex data, issues and comparisons. All monthly Focuses on Economic Data will include the current data and significant recent changes.
- December 2012, reported in January 2013: employment and unemployment data basics. What is employment? What is the unemployment rate? How are they measured? What is the current data? What do they mean?
- January 2013, reported in February 2013: details and issues about the measurement and meaning of employment and unemployment, adding concepts such as underemployment, full employment, etc.
- February 2013, reported in March 2013: detailed breakdown of the data by region and industry (trends, identifying trends and comparisons of regions and demographic groups
- March 2013, reported in April 2013: the relationships of employment and unemployment data to other economic data, such as GDP, CPI, etc., and the business cycle.
- April 2013, reported in May 3013: End of the school year review of employment data and summary of the recent history of U.S. labor markets. THIS LESSON]
Key Economic Indicatorsas of May 3, 2013
On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers decreased 0.2 percent in March after increasing 0.7 percent in February. The index for all items less food and energy rose 0.1 percent in March after rising 0.2 percent in February.
Total nonfarm payroll employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent. Employment increased in professional and business services, food services and drinking places, retail trade, and health care.
Real gross domestic product increased at an annual rate of 2.5 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent.
Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated. The FOMC decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent...
Employment and Unemployment in April, 2013
To better understand the health of the U.S. labor markets and the impact of persistently high unemployment on the U.S. economy, take a quick look at the basic U.S. labor market data for April, 2013. See Figure 1, "U.S. Labor Market Data, April 2013," below.
Look at the unemployment data in Figure 1, above. The U.S. unemployment rate decreased again in April by 0.1 percent, falling 0.6 percentage point since April, 2013. The number of unemployed has dropped by 859,000 in the past year. Are we on the road to a "jobs recovery" since the recession?
In November, 2007, total employment in the U.S. (Current Population Survey) was 146,595,000 jobs. By December, 2009, that number dropped to 138,025. That was a loss of 8,570,000 jobs in the recession. The BLS reported a total of 143,579,000 U.S. jobs in April, 2013. That means the U.S. is still 3 million jobs behind the high of November, 2007.
Note: The BLS also revised the jobs data for the past two months, announcing that the U.S. economy generated 332,000 jobs in February (reported only 268,000 in April) and 138,000 in March, 50,000 more than the reported 88,000 increase.
Figure 2, below, provides more April 2103 unemployment data by ethnic groups and education levels.
[Teacher Note: Ask your students: Given this information about employment and unemployment in April, 2013, does it look like the U.S. is still in a recession?]
Take a look at more of the April, 2013, employment and unemployment report and decide for yourself.
The Employment Report – April 2013
U.S. Bureau of Labor Statistics
Released: May 1, 2013
"Total nonfarm payroll employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, food services and drinking places, retail trade, and health care."
Note: Unless otherwise cited, the data in this lesson is from the May 3, 2013, U.S. Bureau of Labor Statistics "Employment Situation - April 2013" news release. URL: www.bls.gov/news.release/archives/empsit_05032013.htm
Many economists agree that it takes over 200,000 new jobs each month just to keep pace with the normal growth of the population and labor force. If this generalization is true, the economy experienced a net gain in April, 2013. Why, then, did the unemployment rate decrease by just 0.1 percent? Look again at the data in Figure 1. What happened to the population, the size of the labor force, and the number of unemployed?
Remember, the unemployment rate is the number of unemployed as a percentage of the total civilian labor force. In April, 2013, with 165,000 new jobs, the number of unemployed decreased by just 83,000.. The size of the labor force decreased by 31,000. The result - a slight drop in the unemployment rate, rounded to 0.1.
In April, the U.S. labor force participation rate was 63.3 percent, a drop from 63.6 percent a year ago and participation rates over 70 percent in the late 1990s. For a history of the labor force participation rate, go to: data.bls.gov/pdq/SurveyOutputServlet
[Teacher Note: Ask your students what they think about these employment and unemployment numbers. Are they "good news" - lower unemployment rate, or "bad news" - a smaller percentage of the labor force is working? They can discuss how the numbers might mean different things in different contexts or when compared to other numbers.]
When the labor force decreases, the unemployment rate can also decreases as people become more pessimistic about finding jobs and become "discouraged workers" leaving the labor force. When these people start looking for employment, they will, again, be counted as "unemployed."
Figure 3, below, shows the monthly U.S. unemployment rates from 1990 through April, 2013. Note recent high monthly unemployment rate of 10.1 percent in October, 2009 and the most recent low unemployment rate of 4.4 percent in May, 2007.
[Teacher Note: Ask your students: Do you see the "business cycles" of the economy illustrated by the unemployment rates over time?]
For more complete labor market data, as of April, 2012, go the these Tables from the May 4, 2012, BLS employment and unemployment news release.
- Employment Situation Summary Table A. Household data, seasonally adjusted
- Employment Situation Summary Table B. Establishment data, seasonally adjusted
[Teacher Note: Students should be able to identify the recent business cycle as they look at the recent history of unemployment rate data.]
[Teacher Note: The previous twelve months have seen some improvement in U.S. economic conditions. Ask your students to identify the labor market data that has improved and the data that has not. Refer to Table A of the April 2013 "Employment Situation" report.
The national unemployment rate has dropped from 8.1 percent to 7.5 percent from April, 2012, to April, 2013.
The number of employed persons has increased by 1,645,000 in the past year.
- The number of unemployed persons has decreased by 859,000 in the past year.
- The labor force participation rate has decreases by 0.3 percentage points in the past year.
- The number of person "not in the labor force" has increased by 1.6 million in the past year.]
Remember, this is the “non-institutionalized civilian population." Those in institutions (prison, mental facilities, etc.) and the military are not included. This means that about 63.3 percent of the total population was counted as in the “labor force” in April. 89,936,00 people in the U.S., were not in the labor force for a variety of reasons.
The first data point in determining the unemployment rate is the size of the labor force. The unemployment rate is the percentage of the labor force that is unemployed. In April, 2013,11,659,000 people were unemployed, a decrease of 83,000 from the previous month.
11,659,000 divided by 155,238 (labor force) equals 7.51 percent – when rounded to nearest tenth of a point - the reported unemployment rate of 7.5 percent.
[Teacher Note: Students should be able to calculate the unemployment rate, given figures for the size of the labor force and the number of unemployed. Give individuals or groups of students different sets of data and ask them to "do the math." ]
Key Labor Market Definitions
As a reminder, the following are the definitions of the key categories used to report employment and unemployment data from the BLS “Employment Report.” These definitions are from the BLS “Glossary.”
Civilian non-institutionalized population: Included are persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.
Civilian labor force: The labor force includes all persons classified as employed or unemployed (16 and over, non-institutionalized).
Labor force participation rate: The labor force as a percent of the civilian non-institutional population.
Employed Persons: Persons 16 years and over in the civilian non-institutional population who, during the reference week, (a) did any work at all (at least 1 hour) as paid employees; worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family (plus those temporarily absent from employment.)
Employment-population ratio: The proportion of the civilian non-institutional population aged 16 years and over that is employed.
Unemployed: Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4 week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.
Unemployment rate: The unemployment rate represents the number unemployed as a percent of the labor force.
Not in labor force: Includes persons aged 16 years and older in the civilian non-institutional population who are neither employed nor unemployed in accordance with the definitions contained in this glossary. Information is collected on their desire for and availability for work, job search activity in the prior year, and reasons for not currently searching.
- Persons who currently want a job: Persons who want a job, have searched for work during the prior 12 months, and were available to take a job during the reference week, but had not looked for work in the past 4 weeks.
Unemployment by Demographic Groups
As summarized in Figure 2, above, the BLS also reports the unemployment rates for several demographic groups, including race/ethnicity and educational attainment. Go to the May 3, 2013 press release and scroll down to Table A.www.bls.gov/news.release/archives/empsit_05032013.htm Economic News Release .
Gender, Age, and Ethnicity
Look at the section of the table on the unemployment rates for "Adult men, Adult women, Teenagers, White, Black/African American, Asian, and Hispanic/Latino Ethnicity."
[Teacher Note: Ask your students: Do you notice any patterns in this data?]
Unemployment continues to be unevenly distributed among racial/ethnic groups and age levels. Young workers are more than twice as likely to be unemployed than workers over 24 years of age. The unemployment rate for teenagers is very high. Black/African American unemployment significantly exceeds other racial/ethnic demographic groups.
Look again at Table A, specifically at the section about educational attainment (Less than a high school diploma, High school diploma, Some college/associate degree, Bachelor's degree).
[Teacher Note: Ask your students: Do you notice any patterns in this data?]
Education is a strong indicator of potential for unemployment. There is a clear relationship between educational attainment and unemployment rates. The more education you have, the less chance of unemployment - on average. What is a high school diploma worth? You will make more income, for sure (on average), but also a greatly decreased risk of unemployment.
[Teacher Note: More data on income and educational attainment is available at this BLS web page: Education Pays . This webpage shows the relationships of educational attainment, 2011 unemployment rates, and 2011 median incomes.]
Employment - Establishment Survey Data
"Total nonfarm payroll employment increased by 165,000 in April, with job gains in professional and business services, food services and drinking places, retail trade, and health care. Over the prior 12 months, employment growth averaged 169,000 per month."
Job Gains by Industry
- Retail trade employment increased by 29,300.
- Professional and business services employment increased by 73,000.
- Education and health care services employment increased by 28,000.
- Leisure and hospitality employment increased by 43,000.
- Financial activities employment increased by 9,000.
- Transportation and warehousing employment increased by 4,200.
- Financial services employment increased by 9,000.
Job Losses by Industry
- Construction employment decreased by 6,000.
- Federal/state/local government employment decreased by 11,000.
- Information services employment decreased by 9,000
- Mining and logging employment decreased by 3,000
- Manufacturing employment did not change.
[Teacher Note: For more details about employment by industry group, go to: www.bls.gov/news.release/archives/empsit_05032013.htm
Students can research the recent history of employment in different industries and information about careers in those industries.
You can learn about a wide variety of occupations from the "Occupational Outlook Handbook. www.bls.gov/oco/ .]
In April, 2013, the U.S. unemployment rate decreased to 7.5 percent. Job growth of 165,000 was slightly less than the average monthly growth for the past year. Slightly fewer people had given-up looking for work and/or were otherwise not counted as employed or unemployed. in April The size of the labor force increased by 210,000 The recent history of changes in the labor force, employment and unemployment is somewhat erratic - possibly reflecting much uncertainty in the economy.
- Link: Historical Changes in Employment
- Link: Access to historical data for the "B" tables of the Employment Situation News Release
U.S. economic growth, as measured by real GDP growth, increased moderately in the first quarter of 2013, after very slow growth in the fourth quarter of 2012. Recent economic growth has not resulted in the number of jobs needed for a classic economic recovery. Many economists anticipate that, even though jobs growth may continue, the unemployment rate may remain stubbornly high for some time.
[Teacher Note: Ask your students to think about the future. How long will it take the U.S. economy - especially in terms of jobs - to fully recover from the recent recession?]
The U.S. Bureau of Labor Statistics publishes a variety of reports on current issues in labor markets and labor market data. The April, 2009, online edition of “Issues in Labor Statistics” included a report called, “Ranks of Discouraged Workers and Others Marginally Attached to the Labor Force Rise During Recession .” This report addressed the long-standing issue of the importance of including discouraged and marginally attached workers in determining the real level of unemployment.
Read the report. Students should summarize the arguements for including discouraged and marginally attached workers in the labor force and the officially reported unemployment rate. Should the discouraged or marginally attached workers be counted as unemployed? What does the increase in the number of discouraged and marginally attached workers mean for our economy?
[Teacher Note: Although the specific data in this BLS report is outdated (2008-2009), the explanation of the concepts of marginally attached and discouraged workers is still very appropriate.]