Focus on Economic Data: U.S. Employment and Unemployment Rate, September 3, 2010
This lesson printed from:
Posted September 15, 2010
Author: Douglas Haskell
Posted: September 15, 2010
This lesson focuses on the September 3, 2010, U.S. Department of Labor, Bureau of Labor Statistics, announcement of employment data and the unemployment rate for the month of August, 2010. 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 May 5, 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.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee 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...
Each month, the U.S. 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 September 3, 2010, BLS announcement, "Employment Situation: August 2010 ." This lesson will also look at the recent history of employment and unemployment data.
[NOTE TO TEACHERS: "Employment and Unemployment Rate" Focus on Economic Data lesson schedule:
During the first half of the 2010-2011 school year, (September-December), EconEdLink will publish four Focus on Economic Data lessons on employment and the unemployment rate. During this time period, the lessons will begin with the 'basics' in September (this lesson) 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.
- September: 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?
- October: details and issues about the measurement and meaning of employment and unemployment, adding concepts such as underemployment, full employment, etc.
- November: detailed breakdown of the data by region and industry (trends, identifying trends and comparisons of regions and demographic groups
- December: the relationships of employment and unemployment data to other economic data, such as GDP, CPI, etc., and the business cycle.
- May: End of the school year review of employment data and summary of the recent history of labor markets.]
For additional information, teachers should visit these BLS sites:
- Bureau of Labor Statistics: The Current Population Survey (CPS): This site contains a monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics. It provides a comprehensive body of data on the: labor force, employment, unemployment and persons not in the labor force. www.bls.gov/cps/
- Bureau of Labor Statistics Pages: These BLS pages provide additional information related to Employment and the Unemployment Rate.
- Revision of Seasonally Adjusted Labor Force Series in 2008: This is a BLS article on seasonal data adjustments.
- Labor and Productivity Costs: This BLS site provides full historical annual and quarterly measures of labor productivity and costs in the U.S.
- August 10, 2010 Productivity and Costs Report: The following links provide productivity and cost reports for a number of economic sectors in the U.S.
- Historical Changes in Employment: This BLS site provides employment percentages dating back to 1939.
- Historical Unemployment Rate: This BLS site provides unemployment data dating back to 1948.
- 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.
- Revision of Seasonally Adjusted Labor Force Series in 2008: This is a BLS article on seasonal data adjustments.
The September 3, 2010, Bureau of Labor Statistics (BLS) employment report for the month of August, 2010, presented a mixed message. Total U.S. non-farm employment decreased, but private sector employment increased for the sixth straight month. The total decrease was largely a result of the loss of 121,000 government jobs – mostly the loss of 114,000 people hired to conduct the 2010 census. The unemployment rate increased very slightly to 9.6 percent after declining to 9.5 percent in June and July.
To better understand this data, first take a look at some key BLS labor market definitions in the BLS Glossary .
Who is employed?
"Persons 16 years and over in the civilian noninstitutional 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; and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs."
Who is 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."
What is the labor force?
"The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in this glossary."
What is payroll employment?
"Employment is the total number of persons on establishment payrolls employed full or part time who received pay for any part of the pay period which includes the 12th day of the month. Temporary and intermittent employees are included, as are any workers who are on paid sick leave, on paid holiday, or who work during only part of the specified pay period. A striking worker who only works a small portion of the survey period, and is paid, would be included as employed under the CES definitions. Persons on the payroll of more than one establishment are counted in each establishment. Data exclude proprietors, self-employed, unpaid family or volunteer workers, farm workers, and domestic workers. Persons on layoff the entire pay period, on leave without pay, on strike for the entire period or who have not yet reported for work are not counted as employed. Government employment covers only civilian workers."
What is the Unemployment Rate?
The nation’s unemployment rate is the number unemployed as a percentage of the labor force. The labor force includes those age 16 and over who are employed and unemployed. The reported August unemployment rate is 9.6 percent, with 14,860,000 unemployed, from a labor force of 154,110,000.
14,860,000 / 154,110,000 = 9.64 - rounded to 9.6 percent.
Types of Unemployment
There are generally three types of unemployment typically identified by economists, each of which describes the particular circumstances of the individual and their employment situation.
- Frictional unemployment is temporary unemployment arising from the normal job search process. Frictional unemployment helps the economy function more efficiently as it simply refers to those people who are seeking better or more convenient jobs and those who are graduating and just entering the job market. Some frictional unemployment will always exist in any economy.
- Structural unemployment is the result of changes in the economy caused by technological progress and shifts in the demand for goods and services. Structural changes eliminate some jobs in certain sectors of the economy and create new jobs in faster growing areas. Persons who are structurally unemployed do not have marketable job skills and may face prolonged periods of unemployment, as they must often be retrained or relocate in order to find employment.
- Cyclical unemployment is unemployment caused by a drop in economic activity. This type of unemployment can hit many different industries and is caused by a general downturn in the business cycle. Lower demand for goods and services reduces the demand for workers. Much of the increase in unemployment in 2008 was cyclical as a result of the economic downturn and recession.
At the levels of unemployment that economists consider to be the lowest possible sustainable levels (discussed below), the only unemployment that exists is due to friction in labor markets and structural changes in the economy.
Economists define the approximate unemployment rate that is 'full employment'. If unemployment falls to a very low rate, there will be upward pressure on prices. If unemployment rises to a very high rate, there will downward pressure on prices or prices will remain steady. In the middle is a level, or more likely a range, where there is not pressure on wages to rise or fall. That is the full employment rate of unemployment.
Economists do not agree or know for certain what that rate is and it does change over time. A consensus estimate is that the full employment rate of unemployment is currently between 4.5 and 5.0 percent of the labor force being unemployed.
The Employment Situation - August 2010
Bureau of Labor Statistics, U.S. Department of Labor
Released September 3, 2010
BLS: “Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Government employment fell, as 114,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000).”
BLS: “The number of unemployed persons (14.9 million) and the unemployment rate (9.6 percent) were little changed in August. From May through August, the jobless rate remained in the range of 9.5 to 9.7 percent.”
Take a look at the key U.S. labor market data for the first eight months of 2010.
|Table 1: Key Labor Market Data Employment|
|Key Labor Market Data
|*July & August 2010 data are subject to revision.|
Figure 1, shows the U.S. unemployment rates from 1990 to the present. Note the “cycles” of highs and lows that are consistent with the business cycles - economy-wide fluctuations in production or economic activity over months or years around a long-term growth trend. Business cycles are defined by stages of growth, peak, decline, and trough. The National Bureau of Economic Research (NBER) identifies recessions, such as the current downturn, using data such as the employment level. For more about the current recession, go to the NBER’s FAQ Web Page .
Discussion Question: In a business cycle, what is the general historical relationship between total output (GDP) and employment? How is output related to the unemployment rate?
[Teacher Note: The rate of output or growth of GDP normally is positively related to employment and negatively related to the unemployment rate. Generally, as output increases, employment decreases and unemployment decreases. In a business cycle, as output falls - a decline (possibly a recession) usually results in falling employment and higher unemployment.]
Take another look at the labor market data when the private and public sectors are compared. Hiring for the 2010 Census in March-May was a very significant part of the total increase, and the loss of many of those jobs in June-August offset increases in the private sector.
|Table 2: Private & Public Sector Employment
January - August 2010
(Jan - Aug)
|*July & August 2010 data are subject to revision.|
The total change in U.S. non-farm employment in January through August, 2010, was an increase of 1,059,000 jobs, with 863,000 added in the private sector and 196,000 added in the public sector.
An online New York Times article (nytimes.com) by Motoko Rich, published the day of the BLS report, reinforced the “good news-bad news” employment situation. The article began, “American businesses added more jobs in the last three months than originally estimated, calming fears of a double-dip recession. Yet the pace of growth signaled that the wheels of the economic recovery were still spinning in place.” The article added, “Slow growth is certainly cold comfort to those who are out of work and seeking a job, a number that rose to 14.9 million in August, from 14.6 million in July. In one small sign of improvement, the number of people out of work for 27 weeks, which grew alarmingly throughout the recession and its aftermath, declined by 323,000, to 6.2 million in August from 6.6 million in July. The median length of unemployment fell to 19.9 weeks in August, from 22.2 weeks in July.”
Discussion Question: Between 2008 and 2010 federal laws have extended eligibility for unemployment compensation for up to 99 weeks in states with persistently high unemployment rates. Some argue that long er eligibility for unemployment compensation may, in fact, discourage people from seriously seeking employment. Do you agree or disagree?
[TEACHER NOTE: There is no "correct" answer for the underlying question. Students should be able to reason that receiving compensation while unemployed may be a disincentive to work. Others may argue that since the compensation is usually much smaller than typical rates of pay, people will seek employment.]
Breaking Down the Unemployment Data by Major Worker Groups
Unemployment is not spread evenly across the demographic groups. Teenagers suffer the highest unemployment rates, almost three times the average for all groups. Minorities, except Asians, have consistently higher unemployment rates. In August, the unemployment rate for Black/African Americans increased much more than the average, while the rate for Hispanic/Latinos decreased slightly. The BLS did not comment on the changes for the groups.
|Table 3: Unemployment by Demographic Group
|Adult Men||9.8% (+0.1%)|
|Adult Women||8.0% (+0.1%)|
|Black/African American||16.3% (+0.7%)|
|Asians (not seasonally adjusted)||7.2% (-0.1%)|
Breaking Down the Unemployment Data by Educational Attainment
Unemployment remains higher for those people with less education according to BLS data. Interestingly, the rates for those with the least education (less than a high school diploma) have fallen in the past year, while rates for those with more education (at least some college) have increased. While this data may not factor in labor market participation rates and those who have given-up looking for work, it does seem to indicate that industries with more educated employees have been hit hard by the recession.
|Table 4: Unemployment by Educational Attainment
August 2009 to August 2010
|Highest Educational Attainment||August
Aug 09 - Aug 10
|Total, 25 years and over||8.4%||8.3%||-0.1%|
|Less than a high school diploma||15.5%||14.0%||-1.5%|
|High school gradutes, no college||9.8%||10.3%||+0.5%|
|Some college or associate degree||8.2%||8.7%||+0.5%|
|Bachelor's degree and higher||4.7%||4.6%||-0.1%|
[TEACHER NOTE: For information about educational attainment and income, see the BLS site "Education Pays ." This site uses a graphic illustrating the relationship between educational attainment levels, median income. and unemployment rates.]
Length of Unemployment
BLS: “The number of long-term unemployed (those jobless for 27 weeks and over) declined by 323,000 over the month to 6.2 million. In August, 42.0 percent of unemployed persons had been jobless for 27 weeks or more.”
During the past year, the average length of unemployment has increased from 25 weeks to 33 weeks, after a high of 35.2 weeks in June.
In 2008, Congress enacted the Emergency Unemployment Compensation 2008 (EUC) Program , extending unemployment benefits beyond the 26 week limit in states with high unemployment rates. A series of extensions between then and July, 2010, have increased potential eligibility for unemployment benefits to 99 weeks – almost two years. In August, 38 states plus Puerto Rico, qualified for the extensions with 13-week unemployment rates over 6 percent. These states reported 4,546,010 persons claiming Emergency Unemployment Compensation benefits for the week ending August 14, 2010.
More Employment Data from the BLS
Labor Force Participation: “In August, the civilian labor force participation rate (64.7 percent) and the employment-population ratio (58.5 percent) were essentially unchanged."
Part-time Workers: "The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 331,000 over the month to 8.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job."
Marginally Attached Workers: "About 2.4 million persons were marginally attached to the labor force in August, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey."
Discouraged Workers: "Among the marginally attached, there were 1.1 million discouraged workers in August, an increase of 352,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities."
Establishment Survey Data - Employment
The “Establishment Survey” of businesses provides data on total payroll employment and employment by major industry group.
BLS: “Total nonfarm payroll employment was little changed (-54,000) in August. Government employment fell by 121,000, reflecting the departure of 114,000 temporary Census 2010 workers from federal government payrolls. Total private employment continued to trend up modestly over the month (+67,000). Since its most recent low in December 2009, private-sector employment has risen by 763,000.”
The trend of increasing private sector employment seems like a positive sign in the long-run, but the slow rate of growth means that the recession lingers and that the unemployment rate will remain high for some time.
Employment in Industry Groups
- Health Care: “Employment in health care increased by 28,000 in August, with the largest gains occurring in ambulatory health care services (+17,000) and hospitals (+9,000). Thus far in 2010, the health care industry has added an average of 20,000 jobs per month, about in line with the average monthly job growth in 2009.”
- Mining: “Mining employment rose by 8,000 in August. Since a recent low in October 2009, employment in the industry has increased by 72,000. Support activities for mining has accounted for about three-fourths of the gain.”
- Manufacturing: “Manufacturing” employment declined by 27,000 over the month. A decline in motor vehicles and parts (-22,000) offset a gain of similar magnitude in July as the industry departed somewhat from its usual layoff and recall pattern for annual retooling.
- Professional and Business Services: “Within professional and business services, employment in temporary help services was up by 17,000. This industry has added 392,000 jobs since a recent employment low in September 2009.”
- Construction: “Construction employment was up (+19,000) in August. This change partially reflected the return to payrolls of 10,000 workers who were on strike in July.”
- Retail Trade: “Employment in retail trade was about unchanged over the month. A job gain among motor vehicle and parts dealers (+8,000) was essentially offset by losses in building materials and garden supply stores (-6,000).”
- Other Private Sector: “Employment in other private-sector industries, including wholesale trade, transportation and warehousing, information, financial activities, and leisure and hospitality, showed little change in August.”
- Government: “Over the month, government employment fell by 121,000, largely reflecting the loss of 114,000 temporary workers hired for Census 2010. The number of temporary Census 2010 workers peaked in May at 564,000 but has declined to 82,000 in August.”
BLS: “The average workweek for all employees on private nonfarm payrolls was unchanged over the month at 34.2 hours. The manufacturing workweek for all employees increased by 0.1 hour to 40.2 hours, and factory overtime was up by 0.1 hour. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.5 hours.”
“Average hourly earnings of all employees on private nonfarm payrolls increased by 6 cents, or 0.3 percent, to $22.66 in August. Over the past 12 months, average hourly earnings have increased by 1.7 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents, or 0.2 percent, to $19.08.”
Revisions of Past Data
“The change in total nonfarm payroll employment for June was revised from -221,000 to -175,000, and the change for July was revised from -131,000 to -54,000.”
Visit the September 3, 2010, “Employment Situation” Tables:
- Employment Situation Summary Table A. Household data, seasonally adjusted.
- Employment Situation Summary Table B. Establishment data, seasonally adjusted.
The “Employment Situation” report also included some “Frequently Asked Questions about the data and some of the issues impacting the data. Visit the Employment Situation Frequently Asked Questions .
The Labor Market - What Happened This Summer?
Let’s take a look at what happened in the labor market over the summer of 2010 (June to August). The recession continued both by the NBER definition and by evidence of continuing slow labor markets. The population grew – people are still having babies or living longer, and people continue to move to the United States. The labor force also grew in the summer, but was still below the level of June 2009. Many people simply have dropped out of the labor force, many because they have given-up looking for work.
More people were employed over the summer, but there are still 183,000 fewer employed persons than in June, 2002. The number of employed persons increased by 131,000 during the summer, including a decrease of 312,000 public sector jobs and an increase of 74,000 private sector jobs from June to August. Remember, by May 2010, the federal government had hired 564,000 temporary census workers, but that number declined to just 82,000 by August.
Table 5 shows the key economic data for June, July and August, 2010.
NOTE: All employment numbers, except percentages, are in 1,000s.
|Table 5: Employment Data
|Civilian non-institutional population||237,690||237,890||238,099||+409|
|Civilian labor force||153,741||153,560||154,110||+369|
|Not in labor force||83,949||84,330||83,989||+40|
The U.S. unemployment rate remained stubbornly high through the summer, actually increasing by 0.1 percent in August, after falling from the high of 10.1 percent in October, 2009. Remember, two factors affect the unemployment: 1) the size of the labor force, and 2) the number of unemployed persons. In some months, the size of the labor force may have decreased because people have stopped looking for work. If you are not working, but not looking for work, you are NOT unemployed, by BLS definition. Adult men found more jobs. Teenagers found it increasingly difficult to find jobs. Asians and Hispanics may have found it easier.
Interestingly, the unemployment rates decreased for those with less education and increased to those with more education. The reasons for these numbers that tend to go “against the grain” of historic unemployment rates are pretty complicated. The labor force participation rates for high school grads decreased by 0.1 percentage points June to August, but the participation rate for college graduates increased by 1.5 percentage points. The recession is impacting people at all education levels. Still, the chance of being unemployed decreases as one’s educational attainment level increases.
|Table 6: Unemployment by Demographic Group & Education
(Unemployment Rates in Percents)
|Total, 16 years and over||9.5%||9.5%||9.6%||+0.1%|
|Adult men (20 years and over)||9.9%||9.7%||9.8%||-0.1%|
|Adult women (20 years and over)||7.8%||7.9%||8.0%||+0.2%|
|Teenagers (16 to 19 years)||25.7%||26.1%||26.3%||+0.6%|
|Black or African American||15.4%||15.6%||16.3%||+0.9%|
|Asian (not seasonally adjusted)||7.75||8.2%||7.2%||-0.5%|
|Hispanic or Latino Ethnicity||12.4%||12.1%||12.0%||-0.4%|
|Total, 25 years and over||8.2%||8.1%||8.3%||+0.1%|
|Less than a high school diploma||14.1%||13.8%||14.0%||-0.1%|
|High school graduates, no college||10.8%||10.1%||10.3%||-0.5%|
|Some college or associate degree||8.2%||8.3%||8.7%||+0.5%|
|Bachelor's degree and higher||4.4%||4.5%||4.6%||+0.2%|
The key data about reasons for unemployment seems to be the number of new entrants or re-entrants to the labor force. Fewer people are leaving jobs, but many continue to lose jobs. Remember the size of the labor force is one of the factors determining the unemployment rate (plus the number of unemployed).
Reasons for Unemployment, August 2010
- Job losers & persons who completed temporary jobs: 9,305,000 (62.7%)
- Job leavers: 874.000 (5.9%)
- Re-entrants: 3,411,000 (23.0%)
- New entrants: 1,259,000 (8.5%)
Duration of Unemployment, August 2010
The good news is that fewer people are now unemployed for fewer than five weeks. Maybe fewer are being laid-off. The number unemployed for 5-14 weeks increased dramatically – over one-half million people. Those unemployed for over 27 weeks decreased by a half-million, but how many of them ran out of unemployment compensation and have given-up? Even though federal legislation extended the potential length of time for unemployment compensation, many have run out of benefits.
Duration of Unemployment, August 2010
- Less than 5 weeks 2,760,000
- 5 to 14 weeks 3,635,000
- 15 to 26 weeks 2,235,000
- 27 weeks and over 6,249,000
Two increasing phenomena that the BLS now pays more attention to are 1) the number of workers who are working part-time because they cannot find full-time work and 2) those who are marginally attached to the labor force. One criticism of labor market data and the “official” unemployment rate has been that it disregards those who want a job, but have given up looking for work – the marginally attached and discouraged workers.
Employed Persons Working Part Time - Reasons(1)
- Part time for economic reasons(2) 8,860
- Slack work or business conditions 6,380
- Could only find part-time work 2,347
- Part time for noneconomic reasons(3) 18,558
Persons Not in the Labor Force
(not seasonally adjusted)
- Not in labor force 83,989,000
- Marginally attached workers 2,370,000
- Discouraged workers 1,110,000
- Part Time: Refers to those who worked 1 to 34 hours during the survey reference week and excludes employed persons who were absent from their jobs for the entire week.
- Economic Reasons: Refers to those who worked 1 to 34 hours during the reference week for an economic reason such as slack work or unfavorable business conditions, inability to find full-time work, or seasonal declines in demand.
- Noneconomic Reasons: Refers to persons who usually work part time for noneconomic reasons such as childcare problems, family or personal obligations, school or training, retirement or Social Security limits on earnings, and other reasons.
For more definitions and information about labor market terminology, see the BLS Glossary .
Want more information about employment and unemployment data?
The BLS web page has a link to Employment Situation Frequently Asked Questions (FAQs) . Go to this BLS web page for more information.
The September 3 BLS announcement: “Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Government employment fell, as 114,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000).”
“The number of unemployed persons (14.9 million) and the unemployment rate (9.6 percent) were little changed in August. From May through August, the jobless rate remained in the range of 9.5 to 9.7 percent.”
Again, the employment data presents a "good news - bad news" scenario.
The private sector is growing - but very slowly. The government sector lost jobs, but it was expected - "baked into the cake" as financial analysts call it.
The unemployment rate has remained stubbornly high, even as U.S. output increased. U.S. gross domestic product (GDP) grew at an annual rate of 1.6 percent in the last quarter. U.S. labor productivity grew 3.7 percent in the last year, resulting in growth of output without as many new jobs.
Of concern, throughout the recession, has been the number of discouraged workers who have given-up looking for jobs and those working part-time. Unemployed workers in 38 states are eligible for up to 99 weeks of unemployment compensation.
Does the BLS report accurately reflect "real" unemployment?
SHORT ANSWER ESSAY QUESTIONS:
1. How is the unemployment rate determined?
[The number of unemployed persons divided by the labor force expressed as a percentage equals the unemployment rate.]
2. What is a "marginally attached" worker?
[Marginally attached workers are persons “not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Discouraged workers are a subset of the marginally attached.”]
Extension Activity No. 1: Youth Unemployment
In August, the BLS released data concerning youth employment and unemployment during the late Spring and Summer of 2010. Take a look at this data and compare it to your students' experiences.
Employment and Unemployment Among Youth - Summer 2010
Bureau of Labor Statistics
Released: August 27, 2010
From April to July 2010, the number of employed youth 16 to 24 years old rose by 1.8 million to 18.6 million, the U.S. Bureau of Labor Statistics reported today. This year, the share of young people who were employed in July was 48.9 percent, the lowest July rate on record for the series, which began in 1948. (The month of July typically is the summertime peak in youth employment.) Unemployment among youth increased by 571,000 between April and July , about half as much as in each of the two previous summers. (Because this analysis focuses on the seasonal changes in youth employment and unemployment that occur each spring and summer, the data are not seasonally adjusted.)
Youth Labor force
The youth labor force--16- to 24-year-olds working or actively looking for work--grows sharply between April and July each year. During these months, large numbers of high school and college students search for or take summer jobs, and many graduates enter the labor market to look for or begin permanent employment. This summer, the youth labor force grew by 2.4 million, or 11.5 percent, to a total of 22.9 million in July.
The labor force participation rate for all youth--the proportion of the population 16 to 24 years old working or looking for work--was 60.5 percent in July, the lowest July rate on record. The July 2010 rate was down by 2.5 percentage points from July 2009 and 17.0 percentage points below the peak for that month in 1989 (77.5 percent).
The July labor force participation rate for 16- to 24-year-old men, at 62.7 percent, was down by 2.2 percentage points from a year earlier, and the rate for women, at 58.1 percent, was down by 3.0 percentage points over the year. For several decades prior to 1989, the July labor force participation rate for young men showed no clear trend, ranging from 81 to 86 percent. Since July 1989, however, their participation rate for the month has trended down, falling by about 20 percentage points. The July labor force participation rate for young women peaked in 1989 at 72.4 percent, following a long-term upward trend; their rate has since fallen by about 14 percentage points.
The July participation rate for whites declined by 2.8 percentage points from a year earlier, to 63.2 percent. The rate for blacks, at 51.6 percent, was down slightly, and the rate for Hispanics, at 56.1 percent, decreased by 3.3 percentage points. For all three groups, labor force participation rates were substantially lower than their peaks reached in July 1989. The participation rate for Asian youth was 48.3 percent in July 2010, little changed from July 2009.
In July, 18.6 million 16- to 24-year-olds were employed. This summer's increase in youth employment was slightly larger than last year's (1.8 million vs.1.6 million) and about the same as in 2008. The employment-population ratio for youth--the proportion of the 16- to 24-year-old civilian noninstitutional population that was employed--was 48.9 percent in July, down 2.5 percentage points from July 2009. The ratio has dropped by about 20 percentage points since its peak in July 1989. July 2010 marks the first time in the history of the series that less than half of all youth 16 to 24 years old were employed in that month. The sharp decline in recent years reflects continued weak labor market conditions experienced during the recession that began in December 2007.
The employment-population ratio for young men was 49.9 percent in July, down from 52.2 percent in July 2009. The employment-population ratios for women (48.0 percent), whites (53.0 percent), and Hispanics (43.6 percent) in July 2010 also were substantially lower than a year earlier.
In July, 25 percent of employed youth worked in the leisure and hospitality sector (which includes food services), the same as a year earlier. Another 20 percent were employed in the retail trade industry, also the same proportion as a year earlier.
In July 2010, 4.4 million youth were unemployed, essentially the same as in July 2009. The youth unemployment rate edged up over the year to 19.1 percent in July 2010, the highest July rate on record for the series, which began in 1948. In recent years, higher youth unemployment reflects the weak job market. Among major demographic groups, the unemployment rates for young men (20.5 percent),
blacks (33.4 percent), and Asians (21.6 percent) continued to trend up from a year earlier; the jobless rates for young women (17.5 percent), whites (16.2 percent), and Hispanics (22.1 percent) were virtually unchanged.
Extension Activity No. 2: Economic Indicators
What do the levels of employment and unemployment tell us about the current, future and past states of the economy? Leading, Concurrent and Lagging Economic Indicators.
The level of employment (non-agricultural payroll employment) most often seen as a coincident indicator of economic activity. This means that it indicates the current trend and will increase or decrease directly and at the same time with current state of the economy (other measures of current economic activity). It is included as one of four measures in the Conference Board’s “Coincident Economic Index.”
[Teacher note: For a more detailed explanation of the Conference Board’s economic indicator indexes, go to Global Business Cycle Indicators.]
The Conference Board’s “Leading Economic Index” uses ten economic measurements, including “average weekly hours worked by manufacturing workers” and “average number of initial applications for unemployment insurance.” It makes sense that the earliest sign of problems in employment might be a reduction in average work hours as employers cut back hours or reduce overtime, rather than lay-off workers. An increase in initial unemployment claims then is the first sign of actual job losses. This is then followed by a change in the level of payroll employment (a coincident indicator) and, most likely, a change in the unemployment rate (assuming all other factors are constant.) The coincident indicators more clearly show the current trend.
The Conference Board’s “Lagging Economic Index” includes “the average duration of unemployment.” This would naturally follow the level of employment and confirm the earlier signs of labor market problems. As economic conditions worsen, the duration of unemployment will tend to increase. Between December 2008 and December 2009, the average duration of unemployment increased from 19.5 weeks to 29.1 weeks. 39.8 percent of the unemployed in December 2009 had been unemployed for at least 27 weeks.
[Teacher note: For Bureau of Labor Statistics data on the Duration of Unemployment, which is Table A12 of the BLS news release.]
What do you think are the other eight indicators of future economic problems (leading indicators)?
Make your own list of indicators of future problems in employment, output or price level? What do the indicators you have identified tell us about the future of the economy? After you have completed your list, compare it to the Conference Board’s list of the ten components of the “Leading Economic Index.” Go to Global Business Cycle Indicators.