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This lesson examines the March 8, 2013, 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, 2013. This lesson introduces the basic concepts of the BLS employment and unemployment data. The meaning and importance of the data are discussed. Assessment exercises are included for reinforcing knowledge of the concepts.

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 March 8, 2013, BLS announcement, "Employment Situation: February, 2013."  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 2012-2013 school year, (January-May), EconEdLink will publish five Focus on Economic Data lessons on "employment and the unemployment rate." During this time period, the lessons will begin with the 'basics' in January and progressively focus more on complex data, issues and comparisons. All monthly Focuses on Economic Data will include the current data and significant recent changes.

  • December 2012 (reported January 4, 2013): Employment and unemployment data basics. What is employment? What is the unemployment rate? How are they measured? What is the current data? What do they mean?
  • January, 2013 (reported February 1, 2013): Details and issues about the measurement and meaning of employment and unemployment, adding concepts such as underemployment, full employment, etc.
  • February 2013 (reported March 8, 2013): Detailed breakdown of the data by region and industry (trends and comparisons of regions and demographic groups (THIS LESSON)
  • March 2013 (reported April 5, 2013): The relationships of employment and unemployment data to other economic data, such as GDP, CPI, etc., and the business cycle.]
  • April 2013 (reported May 3, 2013): Year-end review of employment and unemployment data and trends.

MATERIALS


Key Economic Indicators

as of March 8, 2013

Inflation

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers was unchanged in January, as it was in December. The index for all items less food and energy rose 0.3 percent in January after rising 0.1 percent in December.

Employment and Unemployment

Total nonfarm payroll employment increased by 236,000 in February, and the unemployment rate edged down to 7.7 percent. Employment increased in professional and business services, construction, and health care.

Real GDP

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.1 percent in the fourth quarter of 2012 (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 3.1 percent.

Federal Reserve

To support continued progress toward maximum employment and price stability, the Committee (FOMC) 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, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.

PROCESS

It was a good month for the U.S. economy.

The Dow Jones Industrial Average and the S&P 500 reached nominal all-time high levels.  Corporate profits were growing.  And, the BLS announced that the U.S. unemployment rate hit a four-year low of 7.7 percent as the economy created 236,000 new jobs.

The U.S. unemployment rate hit a recent high level of 10.0 percent in October, 2009, as the recession deepened.  Between January, 2008, and February, 2009, the U.S. economy lost over 8.7 million jobs.  Millions more simply dropped out of the labor force, no longer looking for jobs.

The economic recovery has been historically slow, with the unemployment rate hovering between 9 and 10 percent for two years and very slowly decreasing to the current 7.7 percent through 2012 and early 2013.  U.S. real GDP growth has been slow during this three-year time period.  In Q4 of 2012, real GDP growth slowed to just 0.1 percent.

Simply looking at the unemployment rate may not provide the whole picture of the health of the labor market.  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, 2013, employment data for example.  The unemployment rate decreased because job creation accelerated and the size of the labor force decreased by 130,000.  170,000 more people were employed and 300,000 fewer people were unemployed.  The result, 236,000 new jobs, looks like good news.

[Teacher Note: 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: www.bls.gov/bls/glossary.htm ]

Take a close look at the February, 2013, 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 8, 2013, BLS "Employment Situation" announcement.

The Employment Situation – February 2013
U.S. Bureau of Labor Statistics
Released: March 8, 2013

"Total nonfarm payroll employment increased by 236,000 in February, and the unemployment rate edged down to 7.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, construction, and health care."

Again, the U.S. unemployment rate has gradually decreased from a recent high of 10.0 percent in October 2009 to the current 7.7 percent. 

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

figure 1

Total U.S. employment has increased from a low of 129,320,000 in December, 2009, to the current level of 135,046,000 (seasonally adjusted).  In that period of time, the U.S. economy has created almost 6 million jobs.  Still, the level of employment in the U.S. is 3 million below the high of 138,042,000 reached in December, 2008

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

Note: See the March 8, 2013, BLS "Employment Situation" announcement for more detailed information. www.bls.gov/news.release/archives/empsit_03082013.htm

Recovery from the 2008-2009 recession has been slow, but maybe employment has finally picked up some steam. GDP growth in Q4 2012 was still very slow. 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: www.nber.org/cycles/general_statement.html

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

Figure 3

[Teacher Note:  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 2013 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). 

[Teacher Note: Ask your students: Are we growing out of the recession? [Both employment and GDP have grown significantly in the past several months, but GDP growth slowed in Q4 2012]

Household Survey Data - Unemployment

The number of unemployed persons in February, 2013, was12.032 million people, down 300,000 from January, and the unemployment rate dropped to 7.7 percent.  Contributing to  the unemployment rate drop was a drop in the size of the labor force of 130,000 and an increase in those "not in the labor force" of 296,000.

Note:  For complete labor force data, see the BLS report, Tables A-1, A-2, and A-3.  www.bls.gov/news.release/archives/empsit_03082013.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.”  

[Teacher Note:  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. ' ]

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

Unemployment among the major demographic groups is illustrated in Figure 4, below.  Note the increase in unemployment of teens.

figure 4

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/archives/empsit_03082013.htm

[Teacher Note: Ask your students: Why  do you think there are there such differences between the demographic groups?]

[Teacher Note: Students may want discuss the breakdown of unemployment by demographic group.   Over 25 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?] 

Unemployment and Education Level

Take a look at the unemployment rates for adults with different levels of education in February, 2013.  Do you see a pattern?

  • Less than a HS diploma:               11.2 percent
  • HS graduates:                                    7.9 percent
  • Some College/Associate degree:   6.7 percent
  • Bachelors degree and higher:         3.8 percent

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 8, 2013, BLS report added a comment about the industries that grew in February, 2011, “Total nonfarm payroll employment increased by 236,000 in February, with job gains in professional and business services, construction, and health care. In the prior 3 months, employment had risen by an average of 195,000 per month."

[Teacher note: Tell your students to take a look at the job picture in various industries.  (www.bls.gov/news.release/archives/empsit_03082013.htm   Ask: How do you characterize the February 2012 employment picture?

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

 

[Teacher Note: In February 2013, all major industry groups except government (-10,000) and transportation and warehousing (-1,300) gained jobs. Job growth was very widespread across the economy.

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: Professional and Business Services (+73,000), Construction (+48,000) and Health Care and Social Assistance (+39,100)]

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 18, 2013 for December, 2012. The most recent news release on metropolitan area employment and unemployment data was made on January 30, 2013 for the month of December, 2012.

Job growth and unemployment has varied significantly between regions.  Rhode Island had the highest state unemployment rate, 9.9 percent.  North Dakota had the lowest state unemployment rates of 3.2%

Regional and State Unemployment

"Regional and state unemployment rates were generally little changed in December (2012). Twenty-two states recorded unemployment rate decreases, 16 states and the District of Columbia posted increases, and 12 states had no change, the U.S. Bureau of Labor Statistics reported today. Forty-two states and the District of Columbia registered unemployment rate decreases from a year earlier, six states experienced increases, and two states had no change."

Regional and State Employment

"In December 2012, nonfarm payroll employment increased in 27 states and the District of Columbia and decreased in 23 states. The largest over-the-month increase in employment occurred in New York (+35,100), followed by New Jersey (+30,200), Georgia (+14,400), and Missouri (+10,200). The largest over-the-month decrease in employment occurred in California (-17,500), followed by Florida (-15,300), Louisiana (-11,400), and Michigan (-10,600). New Jersey experienced the largest over-the-month percentage increase in employment (+0.8 percent), followed by Kansas (+0.6 percent) and Alaska, Georgia, Missouri, and New York (+0.4 percent each)."

"Hawaii experienced the largest over-the-month percentage decline in employment (-0.7 percent), followed by Louisiana and Wyoming (-0.6 percent each). Over the year, nonfarm employment increased in 44 states and decreased in 6 states and the District of Columbia. The largest over-the-year percentage increases occurred in North Dakota (+3.6 percent) and Utah (+3.0 percent). The largest over-the-year percentage decrease in employment occurred in West Virginia (-1.8 percent)."

Regional Unemployment

"The West continued to record the highest regional unemployment rate in December, 8.6 percent, while the Midwest again reported the lowest rate, 7.1 percent. Over the month, no region experienced a statistically significant unemployment rate change. In contrast, significant over-the-year rate changes occurred in three regions: the South and West (-1.2 percentage points each) and the Midwest (-0.8 point). (See table 1.)"

[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 290 of the 372 metropolitan areas, higher in 68 areas, and unchanged in 14 areas, the U.S. Bureau of Labor Statistics reported today. Seven areas recorded jobless rates of at least 15.0 percent, while 33 areas registered rates of less than 5.0 percent. Two hundred eighty-three metropolitan areas reported over-the-year increases in nonfarm payroll employment, 83 reported decreases, and 6 had no change. The national unemployment rate in December was 7.6 percent, not seasonally adjusted, down from 8.3 percent a year earlier. "

"In December, 47 metropolitan areas reported jobless rates of at least 10.0 percent, down from 70 areas a year earlier, while 158 areas posted rates below 7.0 percent, up from 122 areas in December 2011. Yuma, Ariz., and El Centro, Calif., recorded the highest unemployment rates in December 2012, at 27.3 and 25.5 percent, respectively. Midland, Texas, registered the lowest unemployment rate, 3.1 percent. A total of 204 areas recorded December unemployment rates below the U.S. figure of 7.6 percent, 154 areas reported rates above it, and 14 areas had rates equal to that of the nation. (See table 1.)"

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

[Teacher Note: 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/ ]

Lowest and Highest Metropolitan Area Unemployment Rates

In December, 47 metropolitan areas reported jobless rates of at least 10.0 percent, down from 70 areas a year earlier, while 158 areas posted rates below 7.0 percent, up from 122 areas in December 2011. Yuma, Ariz., and El Centro, Calif., recorded the highest unemployment rates in December 2012, at 27.3 and 25.5 percent, respectively. Midland, Texas, registered the lowest unemployment rate, 3.1 percent. A total of 204 areas recorded December unemployment rates below the U.S. figure of 7.6 percent, 154 areas reported rates above it, and 14 areas had rates equal to that of the nation. (See table 1.)"

"The largest over-the-year unemployment rate decline in December was registered in Las Vegas-Paradise, Nev. (-3.3 percentage points). Fourteen additional areas had decreases of 2.0 percentage points or more. Yuma, Ariz., reported the largest over-the-year jobless rate increase (+1.9 percentage points). Four additional areas had increases of more than 1.0 percentage point from a year earlier."

[Teacher Note: Ask your students: 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.]

CONCLUSION

"Total nonfarm payroll employment increased by 236,000 in February, and the unemployment rate edged down to 7.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, construction, and health care."

What does this mean to you?  Good news?

The employment situation announcement for February, 2013, was much more positive than the several preceding months.  Job creation increased.  Yet, there still are over 12 million unemployed and many more discouraged or underemployed.

The increase in U.S. jobs was spread across almost all sectors.  Governments continued to shed jobs in February.

With the increase in employment, you should expect an increase in real GDP growth and output of goods and services.  As incomes increase, consumers should demand more goods and services,  The business cycle, Figure 3, should be on the upswing.  If it is, more jobs should follow, as in a typical economic recovery.

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

ASSESSMENT ACTIVITY

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. 

Take a look at these two BLS web pages:

Regional Employment and Unemployment: www.bls.gov/regions/cpi.asp.

Find your region on the map and take a look at the regional data.

Metropolitan Areas:www.bls.gov/news.release/archives/metro_01302013.htm

Use this page to search for your state and city data.

  1. How does your city and 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 regions  and 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?]