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This lesson examines the November 4, 2011, U.S. Department of Labor, Bureau of Labor Statistics (BLS), announcement of employment data and the unemployment rate for the month of October, 2011. 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.

KEY CONCEPTS

Business Cycles, Employment Rate, Labor Force, Labor Market, Macroeconomic Indicators, Recession, Unemployment, Unemployment Rate

STUDENTS WILL

  • 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 Indicators

as of May 5, 2013

Inflation

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.

Employment and Unemployment

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 GDP

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.

Federal Reserve

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...

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 November 4, 2011, BLS announcement, "Employment Situation: October, 2011."  This lesson will also look at regional data and industry trends.

[Teacher Note: Employment and Unemployment Rate Focus on Economic Data Schedule:

During the first half of the 2011-2012 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 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 and comparisons of regions and demographic groups (THIS LESSON)
  • December: The relationships of employment and unemployment data to other economic data, such as GDP, CPI, etc., and the business cycle.  Plus a year-end review of employment and unemployment data and trends.

MATERIALS

For additional information about the Employment and Unemployment data announcements, teachers should visit these websites:


Key Economic Indicators

as of November 4, 2011

Inflation

On a seasonally adjusted basis, the CPI-U increased 0.3 percent in September after increasing 0.4 percent in August. The index for all items less food and energy rose 0.1 percent in September after increasing 0.2 percent in August.

Employment and Unemployment

Nonfarm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment in the private sector rose, with modest job growth continuing in professional and businesses services, leisure and hospitality, health care, and mining. Government employment continued to trend down.

Real GDP

Real gross domestic product increased at an annual rate of 2.5 percent in the third quarter of 2011 according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.

Federal Reserve

The FOMC decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

PROCESS

The U.S. economy added 80,000 jobs in October, 2011.  The August and September employment figures were adjusted to add an additional 112,000 new jobs. In total, the U.S. economy has added 340,000 jobs over three months. 

Sounds like good news - right?   Even with these new jobs, the U.S. unemployment rate is still 9.0 percent.

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 unemployment 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, 2011, employment data for example.  The number of non-farm jobs in the United States increased by 80,000, but the unemployment rate dropped less than 0.1 percent. 

Read the October, 2011, labor force, employment, and unemployment data to better understand the meaning of U.S. employment data and the unemployment rate.

The Employment Situation – October 2011
U.S. Bureau of Labor Statistics
November 4, 2011

"Nonfarm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment in the private sector rose, with modest job growth continuing in professional and businesses services, leisure and hospitality, health care, and mining. Government employment continued to trend down."

Despite job gains in recent months, 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 increases, highs, decreases, and low rates.  These are generally consistent with the business cycles identified by the National Bureau of Economic Research (NBER). Link to NBER business cycle information: www.nber.org/cycles/general_statement.html

figure 1

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 and creating enough jobs to reduce the unemployment rate.   The consensus estimate of economists is that the economy must create 150,000-200,000 jobs each month just to keep up with population growth and the natural increase in the size of the labor force. 

Take a look at the highlights of the October, 2011, employment  and unemployment data.

Household Survey Data - Unemployment

"Both the number of unemployed persons (13.9 million) and the unemployment rate (9.0 percent) changed little over the month. The unemployment rate has remained in a narrow range from 9.0 to 9.2 percent since April."

Figure 2, below, shows the key U.S. labor force data from the November 2, 2011, BLS press release.

Key Labor Force Data
Ocotber 2011
Category October 2011 Monthly Change
Civilian non-institutionalized population 240,269,000 +198,000
Civilian Labor Force 154,198,000 +181,000
Civilian Labor Force Participation Rate 64.2% No change
Employed Persons 140,302,000 +277,000
Employment-Population Ratio 58.4% +0.1%
Unemployed Persons 13,897,000 -95,000
Unemployment Rate 9.0% -0.1%
Persons not in labor force 86,071,000 +17,000
Employed part time for economic reasons 8,896,000 -37,400
Marginally attached to the labor force 2,555,000 +44,000
Discouraged workers 967,000 -70,000

 

[NOTE:  For complete labor force data, see the BLS report, Tables A-1, A-2, and A-3. www.bls.gov/news.release/empsit.nr0.htm ]

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?

[Teacher Note: This may be an interesting discussion for your students. For definitions of these labor market groups, go to the BLS Glossary. www.bls.gov/bls/glossary.htm

For background information, see the BLS online publication, “Persons Outside the Labor Force Who Want a Job,” www.bls.gov/opub/mlr/1998/07/art3full.pdf .]

U.S. Unemployment is Not Distributed Equally

U.S. unemployment rates by level of educational attainment in October, 2011, and the changes

U.S. Unemployment Rates by Educational Attainment
Age 25 and over
October 2011
Educational Attainment Level Rate
Tota, Age 25 and over 7.8%
Less than a high school diploma 13.8%
High school graduate 9.6%
Some college, no diploma 8.3%
College graduates 4.4%

 

U.S. unemployment rates by demographic group (age and ethnicity) in October, 2011, are shown below in Figure 4.

Figure 4:
U.S. Unemployment Rates by Demographic Group
Demographic Group October
2011
1 month
change
Total (age 16 and over) 9.0% -0.1%
Adult Men (age 20 and over) 8.8% no change
Adult Women (age 16 and over) 8.0% -0.1%
Teenagers (ages 16-19) 24.1% -0.5%
White 8.0% no change
Black/African American 15.1% -0.9%
Asian 7.3% -0.5%
Hispanic/Latino 11.4% -0.1%

 
Note: See Tables A-1, A-2, and A-3 of the BLS report for details of the employment data. www.bls.gov/news.release/cpi.t01.htm


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

[Teacher Note: Students may want discuss the breakdown of unemployment by demographic group.   Almost 24 percent of teenagers (age 16-19) are unemployed and looking for jobs.  What impact might this have on the society and the teenagers?  Why are there such differences between ethic and racial groups?

Also - take a look at the unemployment rates for people with different levels of education in October, 2011, in Figure 3 below.  Do your students see a pattern?]

For more information about unemployment rates and income for groups by educational attainment, go to this BLS website: Education Pays .

Establishment Survey Data – Employment

The November 4 BLS press release commented about the industries that grew in October. “In October, private-sector employment increased by 104,000, with continued job growth in professional and business services, leisure and hospitality, health care, and mining. Government employment continued to contract in October."

See the BLS November 4 press release "Establishment Survey Data" section, www.bls.gov/news.release/empsit.nr0.htm for details.

Question: How do you assess the October employment data?

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

Ask your students if this pattern makes sense to them.  What – if any – is the pattern?  Although their interpretations may be just speculation, they should be able to identify general trends in the economy.]

Regional, State, and Metropolitan Area Employment and Unemployment – September 2011

The BLS also collects and releases data on employment and unemployment in the several geographic regions of the United States and metropolitan areas. The most recent news release on state and regional unemployment data was on October 21, 2011, for the month of September, 2011. The most recent news release on metropolitan area employment and unemployment data was made on November 2, 2011.

[Teacher Note:  Students may be very interested in looking at the data for their region or city.   How is their city’s employment and unemployment situation similar of different from other cities or regions? Your State Employment Office may have more detailed information about employment in local areas and smaller cities.


Highlights from the Regional and State News Release

"Regional and state unemployment rates were generally little changed in September. Twenty-five states recorded unemployment rate decreases, 14 states posted rate increases, and 11 states and the District of Columbia had no rate change, the U.S. Bureau of Labor Statistics reported today. Thirty-eight states registered unemployment rate decreases from a year earlier, 10 states and the District of Columbia had increases, and 2 states experienced no change. The national jobless rate was unchanged at 9.1 percent, but was 0.5 percentage point lower than a year earlier.

"Nevada continued to report the highest unemployment rate among the states, 13.4 percent in September. California posted the next highest rate, 11.9 percent."

"North Dakota registered the lowest jobless rate, 3.5 percent, followed by Nebraska, 4.2 percent."

"The West recorded the highest regional unemployment rate in September, 10.4 percent, while the Northeast reported the lowest rate, 8.2 percent."

The BLS webpage shows the current unemployment rates in the fifty states and a history of the states' rates in alphabetical order.  Take a look at the column on the right side of the page.  http://www.bls.gov/lau/#data

For September’s regional and state employment data, go to the BLS News release and scroll down to Tables 1-6.

Link: www.bls.gov/news.release/archives/laus_10212011.htm


Highlights from the Metropolitan Area News Release

"Unemployment rates were lower in September than a year earlier in 249 of the 372 metropolitan areas, higher in 102 areas, and unchanged in 21 areas, the U.S. Bureau of Labor Statistics reported today. Seven areas recorded jobless rates of at least 15.0 percent, while 17 areas registered rates of less than 5.0 percent. Two hundred twenty-nine metropolitan areas reported over-the-year increases in nonfarm payroll employment, 140 reported decreases, and 3 had no change. The national unemployment rate in September was 8.8 percent, not seasonally adjusted, down from 9.2 percent a year earlier."

"In September, 84 metropolitan areas reported jobless rates of at least 10.0 percent, down from 106 areas a year earlier, while 95 areas posted rates below 7.0 percent, up from 72 areas in September 2010."

"El Centro, Calif., and Yuma, Ariz., recorded the highest unemployment rates in September 2011, 29.6 and 27.0 percent, respectively. The remaining five areas with jobless rates of at least 15.0 percent were located in California."

"Bismarck, N.D., registered the lowest unemployment rate, 2.5 percent. The areas with the next lowest rates were Fargo, N.D.-Minn., and Lincoln, Neb., 3.3 and 3.5 percent, respectively."

The BLS provides a website with a graphic showing a map of the metropolitan areas' with unemployment rates higher or lower than the national average.  http://www.bls.gov/web/metro/mmartcr1.gif Take a look.

Question:  How does your city or the largest metropolitan area near you compare to other metropolitan areas?

Metropolitan Area Data Links

Link:
www.bls.gov/news.release/metro.htm

  • Table 1. Civilian labor force and unemployment by state and metropolitan area
  • Table 2. Civilian labor force and unemployment by state, selected metropolitan area, and metropolitan division (1)
  • Table 3. Employees on nonfarm payrolls by state and metropolitan area
  • Table 4. Employees on nonfarm payrolls by state, selected metropolitan area, and metropolitan division
     

[Note to Teachers:  The BLS report on annual state and regional employment and unemployment data for the year 2010 was released February 25, 2011. www.bls.gov/news.release/srgune.htm  www.bls.gov/news.release/srgune.t01.htm .] 

[Note to Teachers: The BLS also publishes individual "At a Glance" reports for each state and larger cities in those states.   Students may be interested in looking at the data for their local area. www.bls.gov/eag/ ]

The last sections of this 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. 

Read the two BLS announcements:

  1. How does your state compare to the national average and surrounding states?
  2. Are there regional patterns of unemployment in your area that are higher and lower than the national average?
  3. Which five states had the highest unemployment rates last reported month?  Lowest?
  4. Did the unemployment rate decrease in any states last reported month?
  5. Why do you think your region or state differs from other regions or states, or the national employment and unemployment trends?  

[Answers will vary. Students should show understanding of how their regional economy may differ or is similar to the nation or other regions. For instance, is their state more dependent on manufacturing? Is their state more agricultural?]

International Unemployment News

The BLS tracks the unemployment rates of ten industrialized nations.  Their unemployment rates are adjusted to reflect unemployment concepts used in the United States.  In September, 2011, the U.S. (9.1 percent on September)  had the second highest unemployment rate among these nations, 0.3 percent below France.  The nation with the lowest unemployment rate was Japan, at 3.8 percent. Take a look at these international comparisons at www.bls.gov/ilc/intl_unemployment_rates_monthly.htm#Rtable1

CONCLUSION

The U.S. economy created 80,000 new jobs in October 2011 - not enough to keep up with the monthly increase in the size of the labor force from new entrants.  Yet, the unemployment rate decreased by just about 0.1 percent.

Remember, the unemployment rate is determined by the number of unemployed and the size of the labor force.  The number of unemployed decreased by 95,000 in October.  Where did they go?

Be careful not to compare the "Household Survey" and "Establishment Survey" without accounting for their differences.  The Household Survey counts people who have self-reported their employment, unemployment or active job search.  The Establishment Survey counts the number employed (reported to be employed) by business firms.  Sometimes, these numbers go in opposite directions.

9.0 percent is still a very high unemployment rate for this length of time.  Except for a brief period in early 2011, the U.S. unemployment has been at or over 9.0 percent since May of 2009. Previously, the U.S. unemployment rate had fluctuated between 4 and 6 percent between 2001 and 2008.

If the economy truly "recovers" from the recession, employment should pick-up as business hire more workers to meet increased demand for goods and services.  Keep an eye on real GDP growth and employment through future "Focus on Economic Data" lessons.

ASSESSMENT ACTIVITY

Short Answer Questions: 

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

[Their answer should show some understanding of the meaning of unemployment rates and an awareness of the characteristics of their state and/or region.]

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

[Students should be able to explain how increased unemployment impacts incomes and economic growth - the health of the economy.]

EXTENSION ACTIVITY

Research on Recessions

Go to the National Bureau of Economic Research (NBER) website to find the dates of the three most recent U.S. recessions.  Link: www.nber.org/cycles.html

  • Identify the periods of the last three recessions.
  • What are the common characteristics of the recessions?
  • What are the differences between the recessions?
    • Employment Growth?
    • Unemployment? 
    • Real GDP growth?
    • Inflation?
  • How does the 2007-2009 recession compare to the previous recessions?

[Teacher Note:  The three recessions in this time period are: July 1990 to March 1991; March 2001 to November 2001; and December 2007 to June 2009.  Source: National Bureau of Economic Research (NBER), www.nber.org/cycles/cyclesmain.html ]

Links:

Are we still in a recession?