Focus on Economic Data: U.S. Employment and the Unemployment Rate, November 5, 2010

INTRODUCTION

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 March 5, 2010, BLS announcement, "Employment Situation: February 2010."  This lesson will also look at regional employment and unemployment trends, similarities, and differences.

• 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.

PROCESS

The newspaper headline, November 6, 2010:

U.S. Unemployment Rate Stuck at 9.6%

The “unemployment rate” is determined by a fairly simple formula: the percentage of the labor force that are unemployed.  The “employment rate” is the simply the opposite, the percentage of the labor force who are employed, according to the Bureau of Labor Statistics’ definition of “employed.”

The actual determination of the rate – measuring the size of the labor force, how it changes, and determining who is employed or unemployed is not so simple.  Take the October 2010 employment data for example.  The number of employed people in the United States increased by 151,000, but the unemployment rate did not decrease.

Take a closer look at the October 2010 labor force, employment, and unemployment data to better understand the meaning of the unemployment rate.

U.S.Bureau of Labor Statistics News Release, November 5, 2010:

The Employment Situation – October 2010

“Nonfarm payroll employment increased by 151,000 in October, and the unemployment rate was unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Since December 2009, nonfarm payroll employment has risen by 874,000.”

The recovery of U.S. jobs lost during the 2007-2009 recession has been slow.  Most of the recent recessions have been followed by much faster recoveries.  Figure 1, below, shows the monthly national unemployment rates from 1990 to the present.  Note the “cycles” of high and low rates.  These are generally consistent with the business cycles.

Research Activity:

• Identify the periods of the recessions since 1990?
• What are the common characteristics of the recessions?

Employment Growth?

Unemployment?

Real GDP growth?

• How does the 2007 to 2009 recession compare to the other recessions – so far?

The BLS releases monthly data on employment – the number of people working – and unemployment – the number of people not working and looking for jobs.  The October data showed some improvement, but not what is needed to show that the United States economy is healthy again.   Take a look at the highlights of the October 2010 employment data.

Household Survey Data - Unemployment

“The number of unemployed persons, at 14.8 million, was little changed in October. The unemployment rate remained at 9.6 percent and has been essentially unchanged since May.”

Among the major demographic groups, the unemployment rates in October 2010 were:

• Teenagers             27.1 %
• Whites                      8.8 %
• Blacks                    15.7 %
• Hispanics              12.6 %
• Asians                      7.1 %

Note: See Tables A-1, A-2, and A-3 for details of the employment data.

Question: Why are there such differences between the demographic groups?

Information Source: “Labor Force,” Occupational Outlook Quarterly Online (Winter 2009-10 Vol. 53, Number 4)  www.bls.gov/opub/ooq/2009/winter/art3fullp1.htm

Key Labor Force Data, October, 2010:

Civilian labor force                                                 238,530,000                  +208,000

Civilian labor force participation rate                             64.5 %                        -0.2 %

Employed persons                                                139,061,000                   -330,000

Employment-population ratio                                          58.3 %                        -0.2 %

Unemployed persons                                             14,843,000                    +76,000

Unemployment rate                                                          9.6 %                no change

Persons not in the labor force                                84,626,000                  +462,000

Employed part time for economic reasons            9.154,000                   -318,000

Marginally attached to the labor force                      2.548,000                    +54,000

Discouraged workers                                                 1.219,000                    +10,000

[NOTE:  For complete labor force data, see Tables A-1, A-2, and A-3.]

The BLS now collects more data on part-time employees who would like to work full-time, marginally attached workers, and discouraged workers.  These workers may represent “hidden unemployment.”   To be technically counted as unemployed, you have to be actively looking for work.  If you have given-up, you are no longer “unemployed.”

Question:  Should those who can’t find jobs suited to their skills, those who are involuntarily working part-time, or those who have given-up trying to find a job be counted as unemployed?

Establishment Survey Data – Employment

“Total nonfarm payroll employment increased by 151,000 in October, reflecting job gains in mining and a number of service-providing industries. Private-sector payroll employment rose by 159,000 over the month; since December 2009, employment in the private sector has risen by 1.1 million.”

[NOTE: See Table B-1 for the Establishment Survey details.]

Figure 2, below, shows the changes in employment from September to October 2010 by major industry group.

 Figure 2: Employment Change by Selected Industry, September to October 2010 (1,000s) Total nonfarm employment change 151.0 Total private 159.0 Goods-producing 5.0 Mining and logging 7.0 Construction 5.0 Manufacturing -7.0 Durable goods -3.0 Motor vehicles and parts 3.3 Nondurable goods -4.0 Private service-providing 154.0 Wholesale trade 7.3 Retail trade 27.9 Transportation and warehousing -0.1 Information -1.0 Financial activities -1.0 Professional and business services 46.0 Temporary health services 34.9 Education and health services 53.0 Health care and social assistance 34.0 Leisure and hospitality -5.0 Other services 25.0 Government -8.0

Question: How do you characterize the October employment data?

• What industries are growing?
• What industries are not growing or shrinking?
• Are there patterns?

Labor Force Data - Workweek, October 2010

The October data shows small improvement in the average workweek and average hourly earnings.

• Average workweek                                     +0.1 hour        34.3 hours.
• Manufacturing workweek                          +0.1 hour        40.3 hours
• Factory overtime                                       unchanged       3.0 hours.
• Production and nonsupervisory               +0.1 hour        33.6 hours

[NOTE: See Tables B-2 and B-7 for workweek details.]

• Average hourly earnings of all employees          +5 cents         \$22.73.
• Average hourly earnings of private-sector
production and nonsupervisory employees        +7 cents         \$19.17.

[NOTE: See Tables B-3 and B-8 for hourly earnings details.]

Question: The workweek is getting longer (for those with jobs) and weekly pay is improving.  Is this a good sign?  Or, are those who are working simply working a little longer rather than employers hiring more workers?

Revisions of Recent Months Employment Data

In addition to the October estimates released on November 5, the BLS revised the nonfarm employment estimate for the month of August down from a loss of 57,000 jobs to a loss of just 1,000 jobs, and revised the change for the month of September down from a loss of 95,000 jobs to a loss of -41,000 jobs.  Employment data for the most recent two months is subject to revision based on more complete or new data.

Regional and State Employment and Unemployment – October 2010

Released: October 22, 2010

The BLS also collects and releases data on employment and unemployment in the several geographic regions of the United States and metropolitan areas.

Highlights from the October News Release:

“Regional and state unemployment rates were little changed in September. Twenty-three states and the District of Columbia recorded unemployment rate decreases, 11 states registered rate increases, and 16 states had no rate change…”

• Twenty-nine states and the District of Columbia posted unemployment rate decreases from a year earlier, 16 states reported increases, and 5 states had no change,
• In September, nonfarm payroll employment decreased in 34 states and increased in 16 states and the District of Columbia,
• Over the year, nonfarm payroll employment increased in 32 states and the District of Columbia and decreased in 18 states.

Question:  How does your state compare to surrounding states?

State Unemployment

[NOTE: the District of Columbia is counted in a similar way as the states in the employment and unemployment data.]

• The state with the largest one month employment decrease in employment was California with a loss of 63,500 jobs.
• The state with the largest one month percentage decrease in employment was Utah with a loss of 0.8 percent.
• The state with the largest one month increase in employment was the District of Columbia with a gain of 16,500 jobs.
• The state with the largest one month percentage increase in employment was the District of Columbia with a gain of 2.3 percent.
• The state with the largest 12 month percentage increase in employment was the District of Columbia, with a gain of 3.3 percent.
• The state with the largest 12 month percentage decrease in employment was Nevada, with a loss of 1.8 percent.

Question:  How does your state compare to surrounding states?

[NOTE: For definitions of the regions, go to: Regional and State Employment and Unemployment Summary ]

Regional Highlights:

• The region with the highest unemployment rate was the Pacific with 11.6 percent in September.
• The region with the lowest unemployment rate was the West North Central region with 7.1 percent in September.
• The one region with a statistically significant one month unemployment rate change was New England with a decrease of -0.2 percent in September.
• The region with the biggest 12 month decrease in the unemployment rates was the East South Central region with a decrease of 1.2 percent.
• The region with largest 12 month increase in its unemployment rates was the Mountain region with an increase of 0.6 percent.

Question:  How does your region compare to surrounding regions?

Highlights:

• 26 states posted jobless rates significantly lower than the U.S. figure of 9.6 percent,
• 7 states recorded measurably higher rates, and 17 states and the District of Columbia had rates that were not appreciably different from that of the nation.”  (For details, see tables A and 3, and chart 1.)
• The state with the highest unemployment rate In September was Nevada, with an unemployment rate of 14.4 percent.
• The state with the lowest unemployment rate was North Dakota, with a rate of 3.7 percent.
• The state with the largest decrease in its unemployment rate in September was Massachusetts with a decrease of 0.4 percent.
• The state with the largest increase in its unemployment rate was Maryland with an increase of 0.2 percent.
• The state with the largest 12 month decrease in unemployment was Alabama with a decrease of 1.8 percent.
• The state with the largest 12 month increase in unemployment was Montana with an increase of 0.9 percent.

Highlights:

• Between August and September, 16 states and the District of Columbia recorded statistically significant changes in employment.
• The state with the largest one month increase in employment was the District of Columbia with an increase of 16,500 jobs.
• The state with the largest one month decrease in employment was California with a loss of 63,500 jobs.
• The state with the largest 12 month increase in employment was in Texas, with a gain of 152,800 jobs.

Metropolitan Area Employment

Released: November 3, 2010

“Unemployment rates were lower in September than a year earlier in 212 of the 372 metropolitan areas, higher in 143 areas, and unchanged in 17 areas...”

“Thirteen areas recorded jobless rates of at least 15.0 percent, while 10 areas registered rates below 5.0 percent.”

Metropolitan Area Unemployment (Not Seasonally Adjusted)

Highlights:

• The metropolitan area with the highest September unemployment rate was El Centro, California, with a rate of 30.4 percent.
•  “Of the 13 metropolitan areas with jobless rates of at least 15.0 percent, 9 were located in California.”
• The metropolitan area with the lowest unemployment rate in September was Bismarck, North Dakota with a rate of 2.8 percent.
• Of the 10 areas with jobless rates under 5.0 percent, 8 were located in the West North Central census division.
• Overall, 238 areas recorded unemployment rates below the U.S. figure of 9.2 percent (not seasonally adjusted.) 133 areas reported rates above the national rate and 1 area had a rate equal to that of the nation.”
• The metropolitan area with the largest 12 month unemployment rate decrease was Elkhart-Goshen, Indiana, with a rate of 3.1 percent.
• The metropolitan area with the largest 12 month unemployment rate increase was Yuma, Arizona, with an increase of 3.3 percentage points.
• Of the 49 metropolitan areas with a population of 1 million or more, Las Vegas-Paradise, Nevada, had the highest unemployment rate in September of 15.0 percent.
• Thirteen large areas posted unemployment rates of 10.0 percent or more. The lowest jobless rate among the large metropolitan areas was 5.9 percent in Washington-Arlington-Alexandria, D.C.-Virginia-Maryland-West Virginia.”
• Twenty-eight of the large metropolitan areas reported 12 month unemployment rate decreases, while 17 areas recorded unemployment rate increases, and 4 had no unemployment rate change.
• Detroit-Warren-Livonia, Michigan, had the largest 12 month decrease in its unemployment rate with a decrease of 2.4 percentage points.
• Las Vegas-Paradise, Nevada, experienced the largest 12 month unemployment rate increase with an increase of 1.5 percentage points.

Question:  If you live in or near a large metropolitan area, how does your city compare to other cities?

Metropolitan Area Nonfarm Employment (Not Seasonally Adjusted)

Highlights:

“In September, 193 metropolitan areas reported over-the-year decreases in nonfarm payroll employment, 168 reported increases, and 11 had no change.”

• The metropolitan area with the largest 12 month employment decrease was Chicago-Joliet-Naperville, Illinois-Indiana-Wisconsin, with a loss of 69,300 jobs.
• The metropolitan area with the largest 12 month percentage decreases in employment was Yuba City, California, with a decrease of 4.7 percent.
• The largest 12 month employment increase occurred in Washington-Arlington-Alexandria, D.C.-Virginia-Maryland-West Virginia, with an increase of 56,100 jobs.
• The largest 12 month percentage gain in employment was in Manhattan, Kansas, with a gain of 7.1 percent.
“Over the year, nonfarm employment decreased in 19 of the 36 metropolitan areas with annual average employment levels above 750,000 in 2009.”
• The largest 12 month metropolitan area percentage decrease in employment was Sacramento-Arden-Arcade-Roseville, California, with a decrease of 2.7 percent.
• The metropolitan area with the largest 12 month percentage increase in employment was Austin-Round Rock-San Marcos, Texas, with an increase of 2.3 percent.

Question:  If you live in or near a large metropolitan area, how does your city compare to other cities?

CONCLUSION

Once again, read the introductory paragraph of the November 5, 2010, Bureau of  Labor Statistics "Employment Situation - October 2010" news release:

“Nonfarm payroll employment increased by 151,000 in October, and the unemployment rate was unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Since December 2009, nonfarm payroll employment has risen by 874,000.”

As illustrated in Figure 1, the U.S. unemployment rate has remained between 9.5 and 9.7 percent since May 2010.  At least when measured by job creation and unemployment, the impact of the recession seems to linger - even after its official end in June 2009.

Regionally, some areas are recovering faster than others.  Those regions more reliant on manufacturing continue to be weak.  Many of the large number of lost manufacturing jobs may never be recovered as the economy continues to see structural change to more jobs in services and fewer in manufacturing.

Uncertainty about growth and jobs weight heavily on the economy.

ASSESSMENT ACTIVITY

1. What do you think accounts for differences in the unemployment rates between states and regions?

2. What does the trend in the unemployment rate tell you about the health of the economy?

EXTENSION ACTIVITY

The last sections of the Employment and Unemployment lesson provide highlights of the state, region, and metropolitan area employment and unemployment data.

This data may not be quite as current as the national data that is released the first Friday of each month.  It takes a little longer to organize the localized data.