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SPECIAL REPORT ON
UNEMPLOYMENT STATISTICS: MEANING AND MEASUREMENT

Raymond T. Bowman
and
Margaret E- Martin

Office of Statistical Standards
Bureau of the Budget
Executive Office of the President
Washington 25, D. C.
October 1961




i
Table of Contents

Introduction
Basic Concepts
Usefulness of Labor Force Concepts
Some Popular Misconceptions
The Current High Level of Unemployment
A Little Background

INTRODUCTION
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.
There can be, and are, honest differences as to who should be counted
among the unemployed. Most of the descriptions of what is done in
compiling the U. S. series and of possible alternatives have been
written by specialists and are couched in technical language which
discourages the intelligent layman seeking answers to a pressing public
issue. This paper has been prepared in an effort to fill the gap
between the technical discussion of specialists and the series of
charges and counter-charges which have appeared in the public press.
The statement will discuss the meaning, purposes and problems of
measuring unemployment. A brief discussion is also included on why
the current rate of unemployment is causing concern, to illustrate
in a limited way some of the possibilities in using our rich supply
of information on employment and unemployment in interpreting the
economic situation.
Those of us who remember the lack of valid statistics on employment
and unemployment which prevailed during the Great Depression, the
estimates of unemployment made by different people which differed
by millions because there was at that time no direct statistical
series measuring unemployment, appreciate the major advance which has
been made in providing current information. This article, by
describing what is now available on the size and characteristics of
the labor force, will attempt to indicate the value of this advance.
We believe that the employment and unemployment statistics of the
United States are probably the most objective and accurate in
existence anywhere, but that does not mean they may not be improved.
We have no basic quarrel with those who still wish to question
concepts - although it will be asserted that the present concepts
are essentially right for the major purposes f$r which the data are
designed.
Figures on unemployment are so important in general public discussion
of the economic situation, they are looked at by so many as a
"trigger11 statistic indicating when certain lines of public action
may be appropriate, that it is most desirable that the purposes of
the series and the concepts and methods used in compiling them be
widely understood. Admittedly, the way in which unemployment is
defined and measured affects the statistics. For this reason, a
brief discussion of the concept of unemployment as used in the
official U. S. figures is important to understanding the measurement
problem.




2
BASIC CONCEPTS
First, let us recognize that unenrployment is not measured by itself
but as part of a system of statistics on the labor force which is
related to the population in a specific way. The basic concept is
relatively simple. To make measurement feasible and as objective
as possible, the first step is to select that part of the population
for whom the question of employment and unemployment is relevant.
For this purpose, the population Ik years of age or over and not in
institutions is selected. This age limit is chosen not because we
believe that most youngsters of lk or 15 are likely to be working
or looking for work, but because there is special interest in
knowing how many actually do work, at what occupations, etc.
This part of the population is then classified, as far as employment
status goes, into four principal groups, which are: (l) in the
armed forces, (2) employed, (3) unemployed, and (k) not in the labor
force. The first three of these groups constitute the "total labor
force." The total labor force less those in the armed forces comprise
the civilian labor force, which in turn, is the sum of the employed
and the unemployed. Our discussion will be directed to this concept
of the civilian labor force.
The Civilian Labor Force
The concept of "civilian labor force" is a very important one for a
modern free enterprise industrial economy. It is intended to include
those persons who are "economically active" in the sense th&t they
participate or are actively trying to participate in the organized
economic activity of producing commodities or services for pay or
profit. Important activities such as keeping house or attending
school exclusively are not considered economic activities in this
sense and persons engaged solely in such activities are not in the
civilian labor force. Basically, then, the civilian labor force
includes all persons who have a "job11 or who are actively "seeking"
one. It is the sum of these two categories. By definition, then,
the civilian labor force includes only those persons who are in the
labor market.
The Employed
The great bulk of pjersons in the civilian labor force are employed.
The concept of employment is based primarily on the activity of
working for g&in or profit during the period in question. It
includes persons who did not work during the survey week, but who
had jobs from which they were temporarily absent during the entire
week. For example, persons on vacation, paid or otherwise, are
considered as employed - they have a job. Persons home from work
because of illness are also considered employed - they have a job.
To make this clear to users of the data, statistics on employed
persons are available for two subgroups which may seem to some
persons rather peculiar - (l) enployed, working; (2) employed, not
working - with a job but not at work.




3
Those working may not be working full time, so separate statistics
are provided on hours of work. The information on part-time
employment has caused some persons to recognize that it may also
be a measure of part-time unemployment. To provide information on
how much part-time employment is caused by lack of demand for labor,
data on those who are working less than full time because they want
or could accept only part-time work are shown separately from those
working part-time because of economic factors, such as cut-backs
in hours because of slack business or the unavailability of full
time jobs.
Included among the employed are unpaid family workers who do more
than incidental chores (15 or more hours a week) in a family
business or on a family farm. Such unpaid family workers are shown
separately from wage and salaried workers and from the self-employed.
Before leaving the problem of measuring employment, it should be
further noted that students who both attend school and have a job
are counted among the employed, as are housewives when they have
a job in addition to their housework. Only their hours of gainful
employment are counted in their hours of work, of course.
The Uneiqployed
The concept of unemployment is based primarily on the activity of
looking for work on the part of persons who did no work during the
survey week. Some people have argued that those not working nor
looking for work but who indicate in some fashion that they "want
work" should be included as in the labor force and unemployed.
We do not use this concept* Experiments have shown that if we did,
many more persons would be counted as unemployed. We do not use this
concept because it depends too much on a state of mind of the person
involved rather than on an objective criterion indicating that the
person really is in the labor market by offering his services for
hire - that is, actively seeking a job.
It is true that certain exceptions have been made in applying the
"looking for work" concept. Most persons agree that workers who
have been laid off and are waiting to be called back to work by
their former employers should be counted as unemployed even if
they do not actively look for other work in the interim. Persons
waiting the start of a new job are similarly counted as unemployed
until the new job starts. Furthermore, just as persons who would
have been working except for temporary illness are counted as
employed, persons whose period of job seeking was interrupted by
temporary illness are counted as unemployed. Finally, if a respondent
volunteers that he would have been looking except for the belief that
there is no work available in his line of work or in the community, he
is counted as unemployed. The survey has been criticized for including this last exception, which is designed




particularly for small communities in which a large plant has
closed down. On the other hand, the survey has been criticized
by those holding opposite views for not explicitly asking persons
who reported they did not look for work whether they would have
looked had they believed work to be available. The present
practice is a compromise between these two views. It is felt
that the exception does not add materially to the count of the
unemployed. Experiments have shown that explicitly asking the
question adds persons to the count of the unemployed whose current
attachment to the labor force is somewhat remote. Research has
not been carried far enough to suggest an acceptable alternative
to present practice. This small area of indefiniteness between those
unemployed and those not in the labor force is one of the places
where further research and experimentation could profitably be
pursued.
Those Not in the Labor Force
There are in the United States approximately 52 million persons
Ik years of age or over, and not in institutions, who are not,
'according to present concepts, in the labor force. They are not
employed - do not have a job - and they are not looking for work.
Many persons able to hold jobs or to seek them are not doing so.
This is a free labor market and these persons are not in that
labor market. They are neither employed nor unemployed. They
may be in school, housewives, retired, disabled, or have other
personal reasons for not being in the labor force.
Priority Among the Categories
The survey which provides employment status information is called
the Current Population Survey and results are reported in a
government publication, the Monthly Report on the Labor Force. The
survey is taken for one week each month (the week including the 12th
of the month) by asking questions about each member of a sample of
households. Everyone 14 years of age and over is classified in
*one of three groups for that week, as employed, unemployed or not
in the labor force. The number of persons in the armed forces is
then added to obtain the total labor force.
Now it is possible, of course, for a person to both work and look
for work during the same week. Perhaps an ambitious worker looks
for a new job offering higher pay at the same time as he continues
to work at the old job. Perhaps a worker is laid off during the
week, so he works for two days and looks for work for three or
four days during the survey week. How shall such persons be
counted, if we are going to include each person once and only once
in our figures, and yet have the figures refer to the week as a
whole? In order to avoid double counting, or classifying people




5
as employed or unemployed depending on whether they spent more
hours working or looking for work during the week, a strict
system of priorities has been established to enable the civilian
population to be divided into these three distinct groups. This
system puts working first, looking for work second, and not in
the labor force third. Thus, a person who worked one hour at the
beginning of the week, was laid off and hunted assiduously for
a job during the rest of the week would be counted as employed,
since any amount of working take precedence over looking for work.
More specifically, the priorities are: (l) working at any time
during the week; (2) looking for work or on layoff from a job;
(3) neither working nor looking for work but having a job at which
one did not work at all for such reasons as vacation, sickness,
bad weather, etc. (included among the employed in the final count);
(k) not in the labor force.
Thus, a person having a job who did not work at all during the
week on account of sickness, and there are several hundred
thousand each month, would be counted as employed, rather than
unemployed, whether or not he was paid for the time off. On the
other hand, a person who did not work but used his time off to
look for another job would be counted as unemployed since looking
for work takes precedence over having a job at which one did no
work at all.
Note that the priority system makes the major labor force categories
exclusive as well as exhaustive. There are no omissions, no double
counting. It is not sufficient to say merely that a person should
not be counted as "unemployed;" in that case, he must be counted
as either "employed" or "not in the labor force."
USEFULNESS OF LABOR FORCE CONCEPTS
How good are these concepts? Are they the right concepts? Such
questions are always pertinent, but they are naturally raised
most often during periods of rising unemployment. An evaluation
of their usefulness can only be made in relation to the purposes
for which statistics on the labor force are needed.
The labor force concepts used by the United States are designed
to serve a variety of purposes. First, they are designed to
give a measure of the human resources available as a result of
the free option of individuals to seek employment by entering
the labor force. Need may induce this seeking of employment but
motivation is not relevant to the count - it may vary from the
direst of need to the desire for more economic goods or even for




6
the achievement of psychic pleasures associated with a job and a
useful place in society. It is our objective to know to what extent
these human resources are being utilized. Their use or lack of
use affects both the potential output of the economy and the actual
output from the production side and also from the consumption side.
The growth of population and the portion of it which enters the
labor force is the human potential which sets one boundary to the
growth of the economy's output. But the boundaries set by numbers
alone are quite flexible. Changes in the hours worked by
individuals in the labor force are one obvious factor which may
affect economic growth. But productivity may be affected by
changes in the quality of the work force, the talents of the
workers. Infoimation from labor force statistics does not tell
a full story on manpower skills and utilization, but these statistics
do provide much more than is generally recognized, not only on the
hours per week and weeks per year contributed by employed persons,
but also something about the quality of the labor force - the
occupations of the workers, whether skilled or unskilled, and their
educational attainments.
The second use of labor force data is as a key "economic indicator.n
As such, it provides a measure of the operation of the economy
over time, indicates the extent of seasonal and cyclical movements
in the progress of the economy, and provides more specific data on
employment and unemployment as an economic and as ^ social problem.
Thus, interest centers on population characteristics of the unemployed
and of the employed, on shifts resulting from technological changes the growth of some and decline of other industries and occupations and the cyclical movements in the general level of economic activity.
There are other uses of the labor force data, but these appear to be
the major uses. It may be noted that one thing the current concepts
do not provide is a complete measure of need, or loss of income on
account of unemployment. It is possible for some persons to be
employed and yet paid at such low rates that they and their
families are in real need. On the other hand, some of the unemployed
are not in serious financial straits. It also seems clear that one
thing not provided by the unemployed count is a clear and unequivocal
measure of those about whom "something should be done."
Nevertheless, the public naturally and rightfully looks to the
labor force series as one of those needed to provide the information
on which policy can be formulated on such issues as proposals to
extend unemployment insurance, whether or not special public works
programs are desirable, th6 need for retraining courses or other
possible activities affecting manpower supply and utilization and
the operation of the labor market. For this reason, a large number
of details are provided about the employed and the unemployed each




7
month, in addition to the total numbers.
We know, for example, how many persons worked less than 35 hours
during the survey week, and whether this was from personal preference
or for economic reasons such as slack work (on the average, one out
of six persons works short hours from choice or for various personal
reasons). We know the age and sex and marital status of the unemployed,
whether they are looking for their first job or are "experienced"
members of the labor force with an occupational and industrial
attachment - for example, whether they are unemployed steel
workers, carpenters or retail sales clerks. We have information
on how long the unemployed have been looking for work. We know
why persons "with a job but not at work" did not work during the
survey week and whether or not they were paid for the time off.
Over the years, the amount of detail published each month on the
characteristics of the employed and the unemployed has steadily
increased, so that those who wish to use these figures to evaluate
a particular program or policy, to understand the economic
situation, or the conditions of employment, will have the
"building blocks" which can be selected to throw light on a
particular issue.
Furthermore, supplementary questions are asked of the sample
households from time to time, to cast further light on the
conditions of the labor force. Once a year, the incomes of all
members of the sample households are obtained, and analyzed for
individuals and for family units. At that time the survey also
shows the number of persons in the labor force for each family,
how many married women work, and, of these, how many of their
husbands are employed, how many are unemployed. Once a year,
analysis is made of school attendance, and figures are provided
showing how many of our students work during the school-term.
In recent years, there has been an annual count of the number of
persons who hold more than one job during the survey week. Finally,
there is an annual review of the number of persons who were in
the labor force at any time during the preceding year, of the
amount, regularity, and nature of their work experience.
It would be possible, of course, to design different concepts or
definitions. Without changing the basic concepts one could say,
for example, that young people who are attending school should
not be counted among the unemployed, even if they actively look
for work. This would reduce the number of the unemployed by
about 250,000 or about 7 per cent, according to the annual
supplementary survey taken in October, i960. But if students
looking for work are not to be counted in the labor force, it




8
would be only fair to question whether students who find work in
addition to school attendance should be included. If excluded,
that would subtract about 3*8 million from the total employment
count of 67.5 million, a reduction of more than 5 per cent. Should
we adopt such a practice we would give up the information we now
obtain on the employment and unemployment of youths by disregarding
work sought for and engaged in by students. At the same time, we
would be overlooking the fact that working is one of the important
ways of getting a higher education these days. In October of i960,
special questions directed toward college students showed that 20$
were supporting themselves solely by their own work or savings and
another 30$ made some contribution from their own efforts. The
same distortions of our objective criteria of measurement, only
proportionally greater, occur when attempts are made to exclude
other groups whose attachment to the labor force is believed by an
onlooker to be more marginal than that of the chief family breadwinner. In this connection, it is widely accepted that the standard
of living of a large percentage of our families would be drastically
lowered if the wife or other so-called secondary worker did not
contribute regular or even intermittent earnings. The fact of
the matter is, our economy operates on a system in which one out
of 3 in the labor force is a woman, one out of eleven is under
20 years old, nearly one in 20 is 65 or over. Twenty-five per cent
of the employed women and about 10 per cent of the employed men
work at part-time jobs for personal or other reasons not connected
with the economic situation. It seems desirable to enumerate these
various groups separately, as far as distinctions can be made,
but not to try to whittle away at our basic concepts in so doing.
An important analytical tool which reduces the chance of misinterpretation of the data is the regular presentation of the
unemployment rate on a seasonally-adjusted basis. Seasonal adjustment
corrects this key series for such recurrent and noneconomic phenomena
as the influx of students into the labor market during the summer.
SOME POPULAR MISCONCEPTIONS
With these concepts in mind, let us specifically review some of the
criticisms recently directed at the unemployment figures.
In the first place, let us refute the implication that Government
agencies over the past 20 years have intentionally and progressively
exaggerated the amount of unemployment. This is simply not true.
As the brief historical note at the end of this statement shows,
the labor force survey has been under continuous surveillance and
review since it was started in 19^0. If there has been any
intentional exaggeration, cooperation or negligence would have been




9
required on the part of two major departments, the Bureau of the
Budget, the Council of Economic Advisers and the staff and members
of the Joint Economic Committee of the Congress - and this over
a period of several administrations. Such a conspiracy or such
negligence has not occurred.
To comment on a second misconception, it is sometimes assumed that
the survey enumerators determine the number of unemployed by asking
each households "How many people here want a job?" The fact is
that this question is intentionally not asked because we know it
would lead to an overcount of the unemployed. Instead, the question
is asked individually for each person 14 and over in the household
who did not work in the survey week: "Was....looking for work?"
Neither are enumerators free to use their own discretion in the
questions they ask. Not only is the specific question wording
they are to use spelled out for them on the questionnaire, but
frequent training sessions are held to maintain standards of good
interviewing. Furthermore, an elaborate system of reinterviews by
supervisors has been developed by the Bureau of the Census as a
means of controlling the quality of interviewing. Interviewers
whose work does not meet specifications are retrained, or if necessary,
replaced.
Some critics have pointed out that the monthly survey showed more
unemployment than the Population Census did in 19^0 and 1950.
This is true, but the fault does not lie primarily with the current
series. Careful examination on a case-by-case basis was made of
the discrepancies in 1950. Both sets of enumerators were hired by,
both supervisory staffs belonged to, both sets of training materials
were prepared by, the Bureau of the Census. However, the
enumerators for the current survey were experienced, well-trained
enumerators compared with the Census enumerators who had to be
trained in a few hours to cover a great many more subjects than
labor force, employment and unemployment. Analysis of these
comparisons has convinced impartial students of the problem that
the reason for the lower count of unemployment reached in the
Population Census is almost wholly due to the inexperience of the
temporary Census enumerators and the tendency of untrained interviewers
to skip pertinent questions. It is too soon to tell if the use of
self-enumeration in the i960 Census of Population has overcome
this deficiency.
A recent critic has directed attention to the experience of changing
the sample design in 195^ as an indication of the effect of the
attitude of the enumerators on the level of unemployment. At that
time, the Census Bureau was engaged in spreading the sample of




10
25>000 households from 68 areas into 230 areas. Other things
"being equal, spreading the same number of households among more
areas should increase the reliability of results. To see what
effect this shift would have on the results, an overlap period was
provided during which both samples were used. There was an
unexpectedly large difference in -unemployment between the "old11
sample and the "new" sample during one month of the trial period,
January, 19 • The following month the difference had declined
to a reasonable level. A committee of experts from outside the
Government was appointed to review the new sample and the changeover operation and determine if possible what led to the unexpected
result in January. This committee, composed of well-qualified
statisticians from a university, a business group and a labor
organization decided that lack of attention to maintaining
standards of enumeration in the old areas as the new operation
was being organized was the chief cause of the discrepancy. The
committee concluded in its report to the Secretary of Commerce,
"•••the new sample estimates are the more accurate and should be
used in preference to the old survey estimates..." for the overlap
period. The full report of the committee is contained in "The
Measurement of Employment and Unemployment by the Bureau of the
Census in its Current Population Survey" by the Special Advisory
Committee on Employment Statistics, August, 195^•
THE CURRENT HIGH LEVEL OF UNEMPLOYMENT
It seems desirable to comment on the real point of concern which
the figures highlight - the continuing high percentage of
unemployment since the recovery from the 1958 recession. This
discussion will not provide the answers as to the causes of this
high level of unemployment. But it is hoped that an illustration
or two of the use of the labor force figures in relation to
current economic conditions will, together with what has gone
before, make it clear that this high level of unemployment is
real and not a statistical mirage. Search for the causes is
continuing, by private as well as governmental groups, and requires
analysis not only of labor force, employment and unemployment
figures themselves, but of all other types of economic data capable
of throwing light on current economic conditions.
The most direct way to clarify the major issues raised by the
unemployment figures is in terms of a chart showing the seasonally
adjusted percentage of the civilian labor force who are unemployed
each month. Also shown on the same chart is the percent unemployed
among men age 20 years and over in the labor force, seasonally
adjusted.




11

SEASONALLY ADJUSTED UNEMPLOYMENT RATE

P , n o Cvlo tbr Fr.
. e . f iiin oo oe

Jul 1948f

>

°

When seasonally adjusted unemployment is expressed as a percentage of
seasonally adjusted labor force, the major emphasis is on the cyclical
movement in unemployment. Since the chart uses percentages, unemployment is measured relative to the size of the civilian labor force, (in
absolute terns, unemployment for a growing labor force would also
be expected to grow, as would employment*)
The chart clearly shows the major cyclical periods recognized by economic
analysts, namely, the recessions of 19^9, 1951*, 1958 and 1960-61. The
peaks of the chart are in these years and represent high percentages of
unemployment. The concern is primarily over the fact that in the prosperity period after the 1958 recession, namely part of 1959 and early
I960, the unenqaloyment rates did not revert to the lower levels
reached in 19^8, 1951-53, and 1955-57.




12
The relatively low unemployment rates in 1951-53 involve certain
special factors. The period 1951-53 was the period of the Korean
war - the civilian labor force was reduced as the result of
mobilization while simultaneously employment opportunities were
expanding. But the period 1955—5T did not have these unusual
circumstances and the unemployment rate averaged, seasonally
adjusted, just a little over h percent. During the prosperious
period prior to the 19^9 recession it averaged just under k percent.
We will not here discuss whether these rates were too high or too
low. It is sufficient to note that they were considerably better
than those achieved in 1959-60, which averaged above 5 percent.
Furthermore, although it is customary for recovery in the
unemployment rate to lag somewhat after improvements in other
indicators, the rate is currently sticking at a recession level
longer than usual. The upturn from the 1960-61 recession is
generally considered to have started about March 1961. If the
experience following the 19^9> 195^ and 1958 recessions is taken
as a guide, we could expect the unemployment rate to start falling
about July of this year. This did not occur either in July,
August or September, the seasonally adjusted rate remaining just
short of seven percent of the civilian labor force.
There is every reason to be concerned about this situation.
Although it is quite appropriate to ask the question, we can see
no reason to believe that the problem is with the figures themselves.
It is a real problem, not one of changing concepts or measurement
techniques. The concepts and measurement techniques make the data
reasonably comparable for the entire period I9V7-I96I.
It has been suggested that inclusion of certain so-called "marginal11
groups in the labor force inflates the number of unemployed so that
the figures do not depict the "true" course of unemployment on a
comparative basis from year to year. It is time that unemployment
rates are higher among young new workers, slightly higher for men
over 65, and frequently, although not always, higher for women - the
groups sometimes considered to be "marginal." Since these groups
have been included in the labor force since the beginning of the
series, they could affect the year-to-year unemployment comparisons
only if they were entering the labor force in much larger proportions
now than formerly. But these groups have not all been entering
the labor force in larger proportions in recent years. In fact,
there have been conflicting trends. Although a greater proportion
of women are in the labor force now than in 19^8, proportionately
fewer boys and older men are in the labor force now. These changes
in labor force participation have occurred, quite consistently,
year-by-year. As a result, the civilian labor force as a whole




13
has remained a stable percentage of the population Ik years
of age and over. Although concealing divergent trends among the
components,the overall figures provide a rough check that the
unemployment figures have not been inflated because of counting
undue and growing proportions of the population in the labor force.
A more complicated statistical technique termed 11 standard!zing"
indicates that if the age-sex composition of our labor force had
been the same in i960 as it was in 1957* the unemployment rate
in i960 would have been lowered only fractionally, by less than
two-tenths of a percentage point.
The following table provides the percentages of the population in
the civilian labor force, together with the percent of the labor
force unemployed, for the last Ik years. For brevity, annual
average figures are shown, avoiding problems of seasonal adjustment,
but concealing the more exact timing of charges possible from
monthly figures. An examination of these figures shows that the
labor force has not been a higher percentage of the population
during periods of relatively high unemployment. On the contrary,
looking at recent years, the high rate of labor force participation
in 1956 occurred during a prosperious period. In the recession year
of 195*b on the other hand, the proportion in the labor force was
relatively low - excess unemployment apparently was not caused by
excess numbers in the labor force. The percentages of persons in
the labor force in 1951^53* years of high level economic activity,
are lower than most other years, not because our concepts have
changed, but because the Korean mobilization took out of the
civilian labor force persons who were needed in the armed forces.

Year
19^7
19hd
19^9
1950
1951
1952
1953

Per cent of
population* Per cent of
in civilian labor force
.
labor force unemployed Year
55-9
56.6
56.6
56.9
56.1
55.6
55.**

3-9
3.8
5-9
5.3
3.3
3-1
2.9

195b
1955
1956
1957
1958
1959
I960

Per cent of
population* Per cent of
in civilian labor force
labor force unemployed
55.5
56.1
56.9
56.4
56.3
56.3
56.3

5.6
k.h
k.2
b.3
6.8
5.5
5.6

*Non-institutional population 14 years of age
and over.
These factors are not stressed to indicate that the proportion of
the persons in the labor market should not change, or if they did,




Ik

that there would be something wrong with the figures. They are
provided merely to show that overall labor force participation
rates did not, in fact, change in the periods in question in a way
that would add significantly to unemployment • There are a variety
of factors which would make for quite appropriate changes in the
size of the labor force relative to the population of working age,
such as, for example, changes in the age and sex distribution of
the population, changes in school attendance or changes in general
social attitudes toward retirement, employment of married women, etc.
Further light on the reality of the increasing unemployment rate is
afforded by the unemployment insurance system. Insured unemployment
is not as large as total unemployment since the State unemployment
compensation programs generally exclude job seekers having no
recent work experience, the self-employed, agricultural wprkers,
State and local government employees, the unemployed who have
already exhausted benefits, and in some States, former employees
of very small firms. Nevertheless, it is possible to compute the
rate of insured unemployment to insured employment, and compare
this rate with the rate of total unemployment. On that basis,
despite the differences in coverage of the two statistical series,
they show the same general movements from year to year* The rate
for 1959> for example, was approximately a third again as high as
for 1956 for both insured unemployment and total unemployment.
It is not the intention here to attempt a definitive explanation
of the employment-unemployment situation but to show that the
figures are appropriate to tell us that a problem exists and an
answer should be sought. Another example relates to the question
of what we know about the growth of employment relative to the
civilian labor force and associated population growth over the
period 19^7-1960. It is instructive first to divide the period
into three parts 19V7-1953, 1953-1957 and 1957-1960. The last year
of each of these periods includes the turning point at which a
cyclical increase in unemployment started. For these periods we
compare the average annual percentage rate of growth of (l) the
non-institutional population Ik years of age and over; (2) the
civilian labor force; and (3) total civilian employment.
u

Periods

Average Annual Percentage Rate of Increase
Non-inst.
Civilian
population
labor
Ik yrs. & over
force
Employment

191*7-53
i.i
1.0
1.2
1953-57
1.1
1.6
1.2
1957-60
1.2
1.1
.7
1/ Data for Alaska and Hawaii are excluded from the i960 figures
in calculating the average annual rates of change to make them
comparable with the earlier years.




15
The figures show that the population and the labor force grew at
roughly equivalent rates on the average, except for the middle period
when civilian labor force growth accelerated following the Korean
war. Employment kept pace with this growth in the earlier period
but after 1957 employment has grown more slowly. In interpreting
these facts, we must remember that 1957-1960 is still a short period
relatively speaking. If employment had increased at the same rate
as the labor force from 1957 to i960, it would have reached 67.2
million by i960, about 0.8 million higher than the actual average
for that year. The facts indicate, then, that the higher levels
of unemployment in 1959-60 and currently are related to the
slower rate of employment growth relative to the population and the
civilian labor force. This is important information.
Why these things are so and what should be done about them are
important questions. The policy problems aie not easy ones and
there are and will be differences of opinion as to cause and cure.
Neither these statistics nor any others will give clear and simple
answers as to what needs doing, but they are the tools with which
the economic analyst isolates problems so as to find solutions.
No statistical series is perfect and improvements are always in
demand. Larger samples, more frequent results, more detailed
characteristics are some of the possibilities. Reconsideration
of concepts in the light of uses made of the series is always
appropriate. However, the public is not well-served if it is
diverted from consideration of a significant economic symptom
by a denial that it exists. And unfounded suspicion concerning
the reliability of a major statistical series is bound to confuse
present policy and distort consideration of future possibilities.
High level output and economic growth in real terms depend.on fuller
use of all human and material resources available in a free market
economy. Appropriate comparisons with the past are necessary
but current and future efforts should not be limited to what has
been achieved in the past but based on what can be achieved in terms
of the current and future resource availability. The MRLF series,
with related population information, is an important guide to
measuring the availability and utilization of present and future
manpower resources.




16
A LITTLE BACKGROUND
The Monthly Report on the Labor Force was developed under Work
Projects Administration auspices toward the end of the Great
Depression in order to provide the administration with estimates
of the probable work force with which the W.P.A. would have to
contend and some measure of whether progress was being made in
reducing the number of unemployed.
At that time, a variety of conflicting estimates of unemployment
were made, none of them based on direct enumeration. Earlier
attempts to count the unemployed had been sporadic and largely
unsuccessful. The series covering the decade of the thirties,
now generally accepted as most consistent with the MRLF and
available only on an annual basis, was reconstructed after the
fact from other sources using MRLF concepts as far as possible.
This series is the best available for that period, and is
published to provide a continuous historical record but should
be taken only to represent general magnitudes of unemployment. It
is not based on a direct enumeration.
In 19^0, the Office of Statistical Standards of the Bureau of the
Budget began an examination of the W.P.A. survey to determine if
this were just "another set of numbers11 or whether the survey, which
was breaking new statistical ground, was technically adequate and
should be published. When it became clear that the days of the W.
P.A. were numbered, the Bureau also looked into the question of
which permanent government agent might most appropriately continue
the survey. After this review, it was decided that the survey
should be continued and that the Bureau of the Census was the most
appropriate agency for undertaking the work. At the same time, the
widespread interest of other government agencies and the public were
recognized by the establishment of an interagency committee, under
the leadership of the Office of Statistical Standards of the Bureau
of the Budget, to resolve any major issues affecting the survey in
the best interests, not of a single department, but of the Government
and the public as a whole. Since that time, there have been a
number of changes in the sampling design and there has been one
change in definition, but there has been no change in the basic
concept of measurement, that of current attachment to the labor
force, measured in terms of activity during a week.
In July, 1959* responsibility for planning, budgeting, analyzing and
publishing the Monthly Report on the Labor Force was transferred
from the Bureau of the Census to the Bureau of Labor Statistics,
since the series fit in better with the manpower responsibilities
of the Department of Labor. However, the actual collection and
compilation of the information from households in the Current
Population Survey sample is still in the hands of the Bureau of the




17
Census, acting as agent for the BLS, and no change in sample, in
concept, or in question wording has been made since the transfer of
responsibility. The same interagency committee chaired by the
Assistant Director for Statistical Standards, Bureau of the
Budget, continues to watch over the policy implications of any
major proposals affecting the survey, such as sample revision and
seasonal adjustment procedures.
In addition to the general surveillance exercised by the Bureau
of the Budget through its Office of Statistical Standards with
the advice of other government agencies, the Current Population
Survey has had the benefit of a wide range of advice from
specialists and users of the data. A Panel of Technical Consultants
has advised the Census Bureau on the sample design, the Review of
Concepts Subcommittee, established by the Bureau of the Budget,
undertook a fundamental review of the concepts and measurement
problems in the mid-fifties, and the Joint Economic Committee
o f the Congress has held hearings on U. S. employment and
.
unemployment statistics a number of times.
The Review of Concepts Subcommittee was appointed by the Bureau of
the Budget in 195^ to review the labor force and related series in
the light of the needs for employment and unemployment data. In
addition to government agencies, every attempt was made to consult
users of the data among members of the public, research organizations,
business, labor, and individual experts in universities and elsewhere. The full report of this Subcommittee was published in the
"Hearings on Employment and Unemployment Statistics" held before
the Subcommittee on Economic Statistics of the Joint Committee
on the Economic Report, November 7 and 8, 1955•
With regard to the concepts used in labor force statistics, the
Subcommittee recommended continuation of the basic concept of
measuring labor market attachment by activity during the survey
week, but it did recommend one change in the application of this
concept. In consulting members of the public it found almost
universal agreement that two groups, at that time counted among
the employed as having a job although not at work, should be shifted
to the unemployed. These two groups were those on temporary layoff
with definite instructions to return to work within 30 days, and
those who had found new jobs but had not yet reported to work.
According to the definitions then in use, these people had jobs,
even though not working and not receiving earnings. In accordance
with public understanding, they were "unemployed."
At the same time, there were indications that temporary layoffs
were becoming more generally used as a prelude to permanent
layoffs. Promised call-backs did not materialize in many cases.
If persons on temporary lay-off were not included among the




18
unemployed, the usefulness of the series as an early warning system
of an economic downturn might " e impaired. For this reason, the
b
Subcommittee recommended that these groups " e reclassified as
b
unemployed.
The advice of the Subcommittee was accepted and made effective
in January, 1957* However, it should be noted that figures were
available which permitted making this change in the overall
employment and unemployment series back to the beginning of 19^7>
so that the series is consistent for more than 13 years, including
the entire period of the three post-war recessions. Also note
that the groups have been counted separately since, so that anyone
who wishes may adjust them back to the former definitions at any
time if he so desires. In number, the two groups have amounted to
about 275,000 per year, adding less than 10 percent to the unemployed,
taking about O.k percent from the employed.
Minor changes in the series also occurred when the 195° census
population figures were incorporated in January, 1953, and when
Alaska and Hawaii were added in January, i960. These changes do
not affect the overall unemployment rate in any appreciable way.
Users of the unemployment rate statistics, as revised back to
19^7 to take account of the one change in concept noted above, may
rely on the fact that they are using a series which uses the same
basic concepts and methodology for the entire period from 19^7
to the present.





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