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This lesson examines the March 4, 2011, U.S. Department of Labor, Bureau of Labor Statistics (BLS), announcement of employment data and the unemployment rate for the month of February, 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 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 4, 2011, BLS announcement, "Employment Situation: February, 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 second half of the 2010-2011 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

For additional information about the Employment and Unemployment data announcem,ents, teachers should visit these BLS sites:


Key Economic Indicators

as of March 4, 2011

Inflation

The U.S. Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in January, 2011, on a seasonally adjusted basis. From January, 2010, to January, 2011, the all items index increased 1.6 percent before seasonal adjustment. The price index for all items less food and energy increased by 0.2 in January and by 1.0 percent over the year.

Employment and Unemployment

U.S. non-farm payroll employment increased by 192,000 jobs in February, and the unemployment rate fell by 0.1 percent to 8.9 percent. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing.

Real GDP

U.S. real gross domestic product increased at an annual rate of 2.8 percent in the fourth quarter of 2010, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent.

Federal Reserve

The Federal Open Market Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

PROCESS

The newspaper headline, March 5, 2011:

Big Jump in Private Jobs Bolsters Recovery Hopes

The U.S. economy added 192,000 jobs in February, 2011, but the U.S. unemployment rate remained high, at 8.9 percent - a mixed message at best.

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 February, 2011, employment data for example.  The number of non-farm jobs in the United States increased by 192,000, but the unemployment rate dropped by only 0.1 percent. 

Take a closer look at the February, 2011, labor force, employment, and unemployment data to better understand the meaning of the unemployment rate.

The Employment Situation – February 2011
U.S. Bureau of Labor Statistics
March 4, 2011

"Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing."

"The number of unemployed persons (13.7 million) and the unemployment rate (8.9 percent) changed little in February. The labor force was about unchanged over the month. The jobless rate was down by 0.9 percentage point since November 2010."  The BLS also increased the estimate of job gains in January to a gain of 63,000 jobs from the initial estimate of 36,000.

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: http://www.nber.org/cycles/general_statement.html

Figure 1 Unemployment

Research Activity:

  • Identify the periods of the recessions since 1990? 
  • What are the common characteristics of the recessions?
  • What are the differences between the recessions?
    • Employment Growth?
    • Unemployment? 
    • Real GDP growth?
  • How does the 2007 to 2009 recession compare to the other 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:

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 February 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 is that the economy must create 150,000-200,000 jobs each month just to keep up with population growth.  Take a look at the highlights of the February, 2011, employment  and unemployment data.

Household Survey Data - Unemployment

The number of unemployed persons in February, 2011, was13.673 million people, down 190,000 from January.  In the past year, the number of unemployed persons has dropped by 1.187 million. The unemployment rate fell slightly to 8.9 percent since January, and has fallen from 9.7 percent since February, 2010.

Key Labor Force Data
February 2011
Civilian noninstitutionalized population  238,851,000 +147,000
Civilian Labor Force 153,246,000 +60,000
Civilian Labor Force Participation Rate 64.2% No change
Employed Persons 139,573,000 +250,000
Employment-Population Ratio 58.4% No change
Unemployed Persons 13,673,000 -190,000
Unemployment Rate 8.9% -0.1%
Persons not in labor force 85,605,000 +87,000
Empoyed part time for economic reasons 8,340,000 -67,000
Marginally attached to the labor force 2,730,000 -70,000
Discouraged workers 1,020,000 +27,000

[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.”  

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

Among the major demographic groups, the unemployment rates in February, 2011, and changes from January to February were:

All adults 8.9% -0.1%
Adult men 8.7% -0.1%
Adult women 8.0% +0.1%
Teenagers 23.9% -1.8%
Whites 8.0% 0%
Blacks 15.3% -0.4%
Hispanics 11.6% -0.3%
Asians 6.8% -0.1%



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, 2011.  Do you see a pattern?

Less than a high school diploma 13.9%
High school graduate 9.5%
Some college, no diploma 7.8%
College graduates 4.3%


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 4 BLS report added a comment about the industries that grew in February, 2011, “Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing."  The largest reported job growth in industries in February, 2011, were in construction and manufacturing, both gaining 30,000 jobs.  The largest decline by industry group was in government employment, minus 30,000 jobs in February.

Many news writers and analysts noted that the gain in the private sector was encouraging, especially with the gains in manufacturing and construction.  See Table B-1 of the March 4, 2011, report for the Establishment Survey details. http://www.bls.gov/news.release/empsit.b.htm

Question: How do you characterize the October employment data?

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

[Teacher Note: In February, all major industry groups except retail trade (-8,100), government (-30,000) and Information (no change) gained jobs in February, 2011.  

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 and State Employment and Unemployment – February 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 January 25, 2011. The most recent news release on metropolitan area employment and unemployment data was made on February 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 December. Twenty states recorded unemployment rate increases, 15 states and the District of Columbia registered rate decreases, and 15 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Thirty-one states and the District of Columbia posted unemployment rate decreases from a year earlier, 16 states reported increases, and 3 states had no change."

The states with the highest unemployment rates in December were Nevada (14.5 percent), California (12.5 percent), Florida (12.0 percent), Michigan (11.7 percent), and Rhode Island (11.5 percent).

The states with the lowest unemployment rates in December were North Dakota (3.8 percent), Nebraska (4.4 percent), South Dakota (4.6 percent), and New Hampshire (5.5 percent).

The West region had the highest regional unemployment rate in December, 10.9 percent, and the Northeast region had the lowest rate, 8.4 percent.

Question:  How does your state and region compare to surrounding states?

State Data Links

Highlights from the Metropolitan Area News Release

"Unemployment rates were lower in December than a year earlier in 238 of the 372 metropolitan areas, higher in 115 areas, and unchanged in 19 areas, the U.S. Bureau of Labor Statistics reported today. Fourteen areas recorded jobless rates of at least 15.0 percent, while 14 areas registered rates of less than 5.0 percent. Two hundred metropolitan areas reported over-the-year increases in nonfarm payroll employment, 156 reported decreases, and 16 had no change."

El Centro, California recorded the highest metropolitan area unemployment rate, at 28.3 percent, followed by Yuma, Arizona, awith 23.2 percent. Among the 14 areas with jobless rates of at least 15.0 percent, 12 were located in California.

Lincoln, Nebraska had the lowest metropolitan area unemployment rate in December, 2010, just 3.5 percent. The next two areas with very the low unemployment rates were Bismarck, North Dakota, 3.9 percent, and Fargo, North Dakota-Minnesota, with 4.0 percent.  Note: Some metropolitan areas, such as Fargo, extend over state lines.

Many of the largest cities in the United States have higher than average unemployment rates, but many are below the average.  Take a look a the list of the twenty largest U.S. cities in Figure 2, below.  Any surprises?

The Twenty Largest U.S. Cities
Unemployment Rates
December 2010
Rank City State Population Unemployment
Rate
1 New York New York 8,391,881 8.6%
2 Los Angeles California 3,831,868 11.7%
3 Chicago Illinois 2,851,268 8.7%
4 Houston Texas 2,257,926 8.3%
5 Phoenix Arizona 1,593,659 8.4%
6 Philadelphia Pennsylvania 1,547,297 8.4%
7 San Antonio Texas 1,373,668 7.3%
8 San Diego California 1,306,300 10.1%
9 Dallas* Texas 1,299,542 7.9%
10 San Jose California 964,695 10.7%
11 Detroit Michigan 910,921 11.1%
12 San Francisco California 815,358 9.9%
13 Jacksonville Florida 813,518 11.0%
14 Indianapolis Indiana 807,584 8.4%
15 Austin Texas 786,386 6.8%
16 Columbus Ohio 769,332 7.8%
17 Fort Worth* Texas 727,577 7.9%
18 Charlotte North Carolina 709,441 10.7%
19 Memphis Tennessee 676,640 9.4%
20 Boston Massachussetts 645,169 9.3%
*Dallas & Ft. Worth Texas are classified as one metropolitan statistical area. 

 

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

Metropolitan Area Data Links

[Note to Teachers:  The BLS report on annual state and regional employment and unemployment data for the year 2010 was released February 25, 2011. http://www.bls.gov/news.release/srgune.nr0.htm   More comprehensive 2010 regional and state employment and unemployment data can be found at: http://www.bls.gov/news.release/srgune.t01.htm .] 

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

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.]

CONCLUSION

The U.S. economy added 192,000 jobs in February, 2011, but the U.S. unemployment rate remained high, at 8.9 percent - a mixed message.  Construction and manufacturing added a total of  60,000 jobs in February, but governments lost 30,000 jobs. 

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?"

Growth in construction and manufacturing may be a sign of good things to come, but the financial crises facing local and state governments may continue to slow the recovery.  Keep an eye on the employment data reports this spring for further signs of 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?]