How unemployment is calculated in the US, and how much is actually counted

How unemployment is calculated in the US, and how much is actually counted

July 23, 2021 Comments Off on How unemployment is calculated in the US, and how much is actually counted By admin

A little-noticed footnote to a recent report on unemployment in the United States says the “real” number of unemployed people in the country is “not particularly large”.

The Bureau of Labor Statistics, the federal agency that sets unemployment statistics, says the US unemployment rate in March was 4.9%.

It is a much higher figure than most economists expected, with the average unemployment rate among the US workforce being about 3%.

But the headline figure, “real”, is a misnomer.

The real unemployment rate is actually around 7%. 

In a report published on Thursday, the US Bureau of Economic Analysis (BEA) said that the headline unemployment rate was a misstatement of the true unemployment rate.

This was because the Bureau of Labour Statistics “did not consider the number of jobless people to be a reliable indicator of the size of the labor market”, the BEA said. 

The official unemployment rate for the US is calculated by dividing the number who are actively seeking work by the total number of jobs created in the previous month. 

“The BLS did not consider that the labor force participation rate was an indicator of overall job creation in March because the BLS had not conducted any analyses of whether people are actively searching for work,” the BES said.

“The labor force-participation rate is also an indicator, but it is a crude indicator.

For example, the labor-force participation rate for people who are unemployed or who have given up looking for work is only one-tenth the actual rate.

The BLS also did not calculate a labor-market impact of the current labor-supply constraint, the result of which could be much higher than what it calculated,” the BSA said.

The US labour market is far from the bleak picture that many have been led to believe.

Economists have been predicting that job losses are accelerating as the economy recovers from the economic downturn, and that the unemployment rate could reach as high as 9% this year.

But the BEB has so far not forecast any jobs losses. 

In its latest report on the US economy, released on Thursday morning, the BBA noted that the current jobs market is not showing signs of slowing down.

“The unemployment rate has remained relatively unchanged in March, reflecting the labor supply constraint and the strong recovery in the labor markets that is beginning to return,” the report said.

“As a result, the unemployment level is at a high level that reflects the relatively strong labor market recovery.”

It remains possible that the pace of job growth could slow further, however, given the strong economic recovery.

“The report did not detail the reason why the unemployment figures are so different from other US jobs data, but the BEAP expects that the two will both fall between 7% and 9% in March. 

If the BEAs prediction is correct, it would mark the first time since February that unemployment has fallen in the two months since the election. 

But the BEI did not offer a prediction on the job market, saying that “this is still early in the recovery and data is still needed to estimate the impact of these changes”.

The report’s authors also said that “there is a chance that the increase in the unemployment index might have some negative impact on employment growth”.

More: A new report from the American Enterprise Institute and the American Institute for Research on Education and the Workforce finds that many states are continuing to increase the minimum wage and cut other jobs protections, including paid sick days. Read more  Posted by The Bureau Of Economic Analysis

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