Although the published numbers aren’t intentionally misleading, many people have questions about the government’s official unemployment calculations put out by the Bureau of Labor Statistics (BLS).
The BLS offers a detailed explanation of employment and unemployment numbers in its monthly “Employment Situation” news release, including how the BLS determines if a person currently is “not in the labor force,” “underemployed,”[1] or “discouraged.”[2] But have these definitions changed over time? Were the calculations always confusing? FRASER’s historical resources can be used to answer this question.
The Bureau’s study of jobs and unemployment goes back more than a century, with data and research on unemployment during the World War I era, the Roaring Twenties, and the Great Depression. BLS reports, series, and news releases cover employment, payrolls, and unemployment calculations in a wide variety of publications released as part of the Bulletin of the United States Bureau of Labor Statistics, including the monthly Employment and Payrolls series, 1932-1954.
A 1961 Special Report on Unemployment Statistics: Meaning and Measurement presents interesting information on the topic. The introduction for the report begins with a note about the integrity of the data:
As frequently happens during periods of high unemployment, questions have been raised recently concerning the figures on unemployment which the Federal Government publishes each month. Economic analysts, news commentators and members of the general public have asked if we are counting the right kinds of persons among the unemployed, if our concepts are too broad, or possibly too narrow, if the survey methods provide reliable results, if the figures we get today are really comparable with those for past years, if we do ourselves justice in comparison with other countries.
The 1962 BLS publication How the Government Measures Unemployment bears a striking resemblance to the current unemployment documentation. This pamphlet explains the sampling methods that the BLS used, the questions asked in the sample surveys, and the classifications assigned:
From the 1960s to the present, the BLS has presented its calculations and provided answers to common questions in the documentation of the monthly unemployment numbers, including “Frequently Asked Questions About Employment and Unemployment Estimates” beginning in 2007.
As with many other measures of an economy’s health, it is helpful to reassess and define how the data are collected to help researchers understand how best to use the data. The BLS captures a large amount of data and measures of labor underutilization beyond the “official” unemployment rate. These measures can be found on FRASER from 1966 to the present in the historical Employment Situation news release.
[1] For a better understanding of what underemployed means, see Erin A. Yetter, “Why Scarce Resources are Sometimes Unemployed,” Page One Economics, October 2013. https://research.stlouisfed.org/publications/page1-econ/2013/10/01/why-scarce-resources-are-sometimes-unemployed/
[2] For a better understanding of discouraged workers, see B. Ravikumar and Lin Shao, “Discouraged Workers: What Do We Know?,” Economic Synopses, No. 6, 2014. https://research.stlouisfed.org/publications/economic-synopses/2014/03/14/discouraged-workers-what-do-we-know/
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