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This lesson examines the March 9, 2012, U.S. Department of Labor, Bureau of Labor Statistics (BLS), announcement of U.S. employment data and the unemployment rate for the month of February, 2012. 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 November 10, 2014

Inflation

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.

Employment and Unemployment

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.

Real GDP

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.

Federal Reserve

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.

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 9, 2012, BLS announcement, "Employment Situation: February, 2012."  This lesson will also look at regional data and industry trends.

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

During the second half of the 2011-2012 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.

  • January: 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?
  • February: Details and issues about the measurement and meaning of employment and unemployment, adding concepts such as underemployment, full employment, etc.
  • March: Detailed breakdown of the data by region and industry (trends and comparisons of regions and demographic groups (THIS LESSON)
  • April: The relationships of employment and unemployment data to other economic data, such as GDP, CPI, etc., and the business cycle.]
  • May: Year-end review of employment and unemployment data and trends.

RESOURCES


Key Economic Indicators

as of March 9, 2012

Inflation

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers rose 0.2 percent in January after being unchanged in December. The index for all items less food and energy rose 0.2 percent in January after increasing 0.1 percent in December. NOTE: The BLS CPI news release for February 2012 was re-released March 7, 2012, to correct some relative importance date in the tables. There was no change in the wording of the original CPI release.

Employment and Unemployment

Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Real GDP

Real gross domestic product increased at an annual rate of 3.0 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.

Federal Reserve

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee (FOMC) expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today 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 late 2014.

PROCESS

The U.S. economy added  227,000 jobs in February, 2012, after adding over 500,000 new jobs in December 2011 and January 2012.   Despite all of those new jobs, the U.S. unemployment rate remained at 8.3 percent in February, as 576,000 people entered or re-entered the labor force.

Remember, the “unemployment rate” is determined by a fairly simple formula.  It is 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 February, 2012, employment data for example.  While more people may be working, as happened in February, the labor force increased by even greater numbers and the unemployment rate remained the same as January.

[Note to Teachers: Clarify the "math" of determining the unemployment rate.  [Number of unemployed divided by the labor force.]  Define the terms "labor force" and "unemployed." [BLS Glossary: ' ]

Take a close look at the February, 2012, labor force, employment, and unemployment data to better understand the meaning of the unemployment rate.

Note:  Unless otherwise cited, all quoted materials in this lesson are from the March 9, 2012, BLS "Employment Situation" announcement.

The Employment Situation – February 2012
U.S. Bureau of Labor Statistics
Released: March 9, 2012

"Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent. Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining."

The U.S. unemployment rate has gradually decreased from a recent high of 10.0 percent in October 2009 to the current (January and February 2012) 8.3 percent. 

Figure 1, below, shows the monthly U.S. unemployment rates from 1990 tot he present.  Note the highest recent rate in October, 2009.

figure 1

Total U.S. employment has increased from a low of 137,968,000 in December, 2009, to the current level of 142,065,000.  In that period of time, the U.S. economy has created just over 4 million jobs.

The number of U.S. unemployed persons has decreased from a recent high of 15,421,000 in October 2009 to the current 12,086,000. In this period, almost 3.36 million fewer workers are unemployed. 

How do these numbers add up to the unemployment rates during this time?  A key factor in the determination of the unemployment rate is the size of the labor force.  See Figure 2, below, for some key labor market data

figure 2

As indicated in Figure 2, although 227,000 new jobs were created in February, the labor force grew by 476,000.  The size of the population who were "not in the labor force" decreased in February by 310,000. The result is the unemployment rate remaining essentially the same from January to February.

Note: See the March 9, 2012, BLS "Employment Situation" announcement for more detailed information. http://www.bls.gov/news.release/empsit.nr0.htm

Recovery from the 2008-2009 recession seems to have finally picked up steam, both in employment and GDP growth.  Most of the recent recessions have been followed by much faster recoveries.  Again, look at Figure 2.  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: http://www.nber.org/cycles/general_statement.html

[Note to Teachers: If necessary, review the concept of the business cycle.   See Figure 3, below for a business cycle graphic representation.]

figure 3

[Note to Teacher:  Students should be able to interpret the business cycle model to identify:

  • Periods of the recession since 1990.
  • The recessionary phase of the business cycles.
  • Relationship of the business cycle to employment trends. (See Figure 1.)
  • How does the 2008 to 2009 recession compare to the other recessions?

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 ]

The February 2012 employment data showed some improvement.  The consensus estimate is that the economy must create 150,000-200,000 jobs each month just to keep up with population growth.  Take another look at the recent employment data (Figures 1 and 2). 

Have really we grown out of the recession? [Both employment and GDP have grown significantly in the past several months.]

Household Survey Data - Unemployment

The number of unemployed persons in February, 2012, was12.806 million people, up 48,000 form January, but down almost 300,000 from December. The unemployment rate in February remained the same as January, with almost one-half million people entering the labor force.[NOTE:  For complete labor force data, see the BLS report, Tables A-1, A-2, and A-3. http://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.”  

Good news!  In February, 2912, the number of people working part-time for because they could not find full-time work decreased by 147,000.  Still, over eight million people were working part-time because they could not find full-time work or they because of economic conditions.

[Note to Teacher:  Ask your students:  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

Among the major demographic groups, the unemployment rates in February, 2012, and changes from January to February were:

Group                             February 2012        One month change

All adults 8.3%     0
Adult men 7.7%     0
Adult women 7.0%     0
Teenagers 23.8%  + 0.5
Whites 7.3%  -  0.1
Blacks 14.1%  + 0.5
Hispanics 10.7%  + 0.2%
Asians   6.3%  -  0.4%


Note
: See Tables A-1, A-2, and A-3 of the BLS report for details of the employment data. http://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?] 

Take a look at the unemployment rates for people with different levels of education in February, 2012.  Do you see a pattern?

 Less than a high school diploma 12.9% unemployed
 High school graduate   8.3% unemployed
 Some college, no diploma   7.3% unemployed
 College graduates   4.2% unemployed


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 March 9 BLS report added a comment about the industries that grew in February, 2011, “Private-sector employment grew by 233,000, with job gains in professional and business services, health care and social assistance, leisure and hospitality, manufacturing, and mining."

Take a look at the job picture in various industries.  (http://www.bls.gov/news.release/empsit.b.htm )  How do you characterize the February 2012 employment data?

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

[Teacher Note: In February 2012, all major industry groups except retail trade (-7,400), government (-6,000), Information (-1,000), and construction (-13,000) gained jobs.   

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.  The biggest job gains were: health and social assistance (+61,100 jobs, temporary help services (+45,200), and leisure and hospitality (+44,000).]

Regional and State Employment and Unemployment – February 2012

The BLS also collects and releases data on employment and unemployment in the several geographic regions of the nation, the states, and metropolitan areas. The most recent news release on state and regional unemployment data was on January 24, 2012 for December, 2011. The most recent news release on metropolitan area employment and unemployment data was made on February 1, 2012 for the month of December, 2011.

Job growth and unemployment has varied significantly between regions.  While California continues to have very high unemployment, North Dakota's unemployment rate was very low.

Regional and State Employment and Unemployment

"Regional and state unemployment rates were slightly lower in December. Thirty-seven states and the District of Columbia recorded unemployment rate decreases, 3 states posted rate increases, and 10 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Forty-six states registered unemployment rate decreases from a year earlier, while four states and the District of Columbia experienced increases. The national jobless rate, 8.5 percent, continued to trend down in December and was 0.9 percentage point lower than in December 2010." 

"In December, nonfarm payroll employment increased in 25 states and the District of Columbia, decreased in 24 states, and was unchanged in 1 state. The largest over-the-month increase in employment occurred in Texas (+20,200), followed by Indiana (+15,100) and California (+10,700). The largest over-the-month decrease in employment occurred in New York (-14,000), followed by Missouri (-11,800) and Washington (-11,600). South Dakota experienced the largest over-the-month percentage increase in employment (+1.1 percent), followed by North Dakota (+0.9 percent) and Indiana, Kentucky, and Utah (+0.5 percent each). Nevada experienced the largest over-the-month percentage decline in employment (-0.9 percent), followed by Alaska (-0.5 percent) and Maine, Missouri, and Washington (-0.4 percent each)."

"Over the year, nonfarm employment increased in 46 states and the District of Columbia and decreased in 4 states. The largest over-the-year percentage increase occurred in North Dakota (+5.7 percent), followed by Utah (+3.0 percent) and Oklahoma (+2.7 percent). The largest over-the-year percentage decrease in employment occurred in Delaware (-0.7 percent), followed by Alaska (-0.5 percent) and Georgia (-0.4 percent)."

State and Regional Employment and Unemployment Summary

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

Metropolitan Areas Employment and Unemployment

"Unemployment rates were lower in December than a year earlier in 329 of the 372 metropolitan areas, higher in 36 areas, and unchanged in 7 areas, the U.S. Bureau of Labor Statistics reported today. Ten areas recorded jobless rates higher than 15.0 percent, while 24 areas registered rates of less than 5.0 percent. Two hundred thirty-nine metropolitan areas reported over-the-year increases in nonfarm payroll employment, 127 reported decreases, and 6 had no change. The national unemployment rate in December was 8.3 percent, not seasonally adjusted, down from 9.1 percent a year earlier."

"Nonfarm payroll employment data were available in December 2011 for 32 metropolitan divisions, which are essentially separately identifiable employment centers within a metropolitan area. Twenty-four of the 32 metropolitan divisions reported over-the- year employment gains and 8 reported losses. The largest over-the-year increases in the metropolitan divisions occurred in New York-White Plains-Wayne, N.Y.-N.J. (+48,200), Seattle-Bellevue-Everett, Wash. (+36,900), and Boston-Cambridge-Quincy, Mass. (+32,100). The largest over-the-year decreases in the metropolitan divisions were in Nassau-Suffolk, N.Y. (-9,900), Bethesda-Rockville-Frederick, Md. (-5,700), and Wilmington, Del.-Md.-N.J. (-4,100)."

[Note to Teachers:  If your school is in a metropolitan area, have your students compare their area to other metropolitan areas in their region.]

[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. http://www.bls.gov/eag/ ]

Lowest and Highest Metropolitan Area Unemployment Rates

California continues to be the state hit with the highest unemployment rates in its metropolitan areas. The northern midwest/plains states enjoy some of the lowest unemployment rates.  Figure 4, below, shows the ten highest and ten lowest unemployment rates for all metropolitan areas and for the 49 largest metropolitan areas.

Do you see patterns?  Can you explain why some cities are very high or very low? [One key factor is energy exploration and extraction - creating jobs in some Gulf of Mexico cities and north central states.  Some areas that were among the fastest growing prior to the 2008-2009 recession now have some of the highest unemployment rates.]

 

figure 4

ASSESSMENT ACTIVITY

Have your students click the start button below to complete an interactive exercise to assess their knowledge of the Employment and Unemployment Rate lesson.

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.]

CONCLUSION

The U.S. economy added 227,000 jobs in February, 2012, but the unemployment rate remained high, at 8.3 percent - a mixed message.  Most industry groups gained jobs, but almost 13 million people in the U.S. remained unemployed.

What does this mean to you?  Good news or bad?

The unemployment rates for cities and regions across the United States vary greatly.  North Dakota and Nebraska are doing quite well.  California and Nevada continue to have very high unemployment rates.  The Northeast region is doing relatively well, especially when compared to the West region.  It seems like the states that had such high growth rates just a few years ago are now suffering. 

Is the old adage true, "the bigger they are, the harder they fall?"

Keep an eye on the employment data reports this spring for further signs of U.S. economic growth.

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. 

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?]