How is the unemployment rate actually calculated?

I bet you are going to be surprised. It’s a survey! Here is an excerpt from www.bls.gov:

“Early each month, the Bureau of Labor Statistics of the U.S. Department of Labor announces the total number of employed and unemployed persons in the United States for the previous month.

Some people think that to get these figures on unemployment, the Government uses the number of persons filing claims for unemployment insurance benefits under State or Federal Government programs.

Other people think that the Government counts every unemployed person each month. To do this, every home in the country would have to be contacted—just as in the population census every 10 years. This procedure would cost way too much and take far too long.

The Government actually conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940, when it began as a Work Projects Administration project.

There are about 60,000 households in the sample for this survey. This translates into approximately 110,000 individuals.

Each month, 2,200 highly trained and experienced Census Bureau employees interview persons in the 60,000 sample households for information on the labor force activities.

The interviewer prepares a roster of the household members, including their personal characteristics (date of birth, sex, race, Hispanic ethnicity, marital status, educational attainment, veteran status, and so on) and their relationships to the person maintaining the household.

This information, relating to all household members 15 years of age and over, is entered by the interviewers into laptop computers; at the end of each day’s interviewing, the data collected are transmitted to the Census Bureau’s central computer in Washington, D.C. In addition, a portion of the sample is interviewed by phone through three central data collection facilities.

Respondents are never asked specifically if they are unemployed, nor are they given an opportunity to decide their own labor force status.

Unless they already know how the Government defines unemployment, many of them may not be sure of their actual classification when the interview is completed.

Similarly, interviewers do not decide the respondents’ labor force classification. They simply ask the questions in the prescribed way and record the answers. Based on information collected in the survey and definitions programmed into the computer, individuals are then classified as employed, unemployed, or not in the labor force.”

I personally haven’t been asked to take a survey yet. Have you?

Ken

Ken Lazar, CEO

Ability Professional Network

(614) 403-6079

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