BLS Methodology: Unemployment Rate

First of all, before anyone says a word relating to “shrub,” this is NOT about the current rate, past rate, or future rate. This is about the methodology used to reach the current rate.

This thread has a lengthy history. Long ago in a thread not so far away, I quoted a popular 80s song lamenting the unemployment statistics of the time. Tracer corrected me, saying that the song represented a “popular myth” that statistics stop counting people who drop off insurance. I was dubious as to this claim, but not aroused to challenge it. However, in F-9/11, a woman working for an employment company of some high position stated that the official unemployment rate for the city was some lower number (I misremember what this was, it was high, but not shockingly high), and then stated that because most of them had fallen off of Unemployment Insurance (UI), they stopped being counted. My ears perked up and this thread leaped to my mind, so I bookmarked it for the rest of the movie.

Now, Michael Moore documentaries have not been known to be hotbeds of journalistic accuracy, and my other source is a decidedly leftist song, so coming home, I’ve gone straight to the horse’s mouth. The Bureau of Labor Statistics has a webpage FAQ that answers how thier statistics are collected. More accurately, it TRIES to answer, but does a fairly miserable job of it. Two of the questions:

  • Where do the statistics come from?
    Because unemployment insurance records, which many people think are the source of total unemployment data, relate only to persons who have applied for such benefits, and since it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country.

  • Who is counted as unemployed?
    Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.

Now, the first question looks almost like it answers the question. It states that, yes, there is a myth that UI records are the sole source of data, and that ti is not true, since they use a mysterious “CPS” (I suspect a simple local survey - correction: it is) to measure total unemployment.

However, neither it nor the second question actually says anything about not measuring people who dropped off UI. It further reduces the field to those who “actively looked for a job… and are currently available for work” - what do these phrases mean? “Currently available for work”? How is that defined? It clearly isn’t limited to those physically or mentally handicapped, otherwise it would say so.

After looking over BLS and other reports (no one is very specific), I’m feeling more and more that Jello and the lady in F-9/11 were on the more accurate side of the fence, though it isn’t clear cut.

I think that many people who drop off UI are lost in the system, while others may continue to be tracked or, more likely, estimated via the CPS.

However, because of the CPS, it seems that the “national average” is accepted based on a sample survey of 50,000. This scenario further makes completely possible the woman in F-9/11’s claim that the local Flint, Michigan area has unemployment approaching 40-50% that is not calculated by the Feds - people that, under their definition, “are not seeking work or are unable to work.”

I’m putting this question in GD instead of GQ because I’m almost sure that it’ll either get 0 replies or 4 pages of people arguing, being a decidedy partisan and complicated question. If you see fit, mods, please feel free to move it.

I also know that there are those of you out there who are very well informed in the field of labor statistics, and you can probably lay waste to this question in one swoop - either that, or say “it is complicated”… which it seems to be.

So, thgis is the question. Do people fall off the radar after losing UI, and if they do, are they estimated back into the equation accurately under the CPS?

I’m not sure where the confusion is. Look at the FAQ entries again. The BLS does not use the Unemployment roles to calculate the unemployment rate. It conducts a survey and calculates the rate from that.

You are right that the survey covers 50,000 households. This seems like a good number to me. Many surveys use a much lower number of respondants. Also, if you look here you will see that the methodology is not simply dialing 50,000 random houses each month and using that data. It seems quite a bit more sophisticated than that.

So, the short answer to the last question you asked is no, people do not fall out of the unemployment number when they stop recieving unemployment benifits. And yes, they still are counted by the CPS.

I should note, however, that when a person stops looking for work for 4 weeks they will drop off of the unemployment number. That is they may count as not having a job and not count as unemployed. Some have argued that these people are a significant number. I think the claims range up to double the number of unemployed.

Right, they are considered out of the “labor force”.

As I understand it, it goes like this:

Total population > Labor population > employed population

On each layer you have your have-nots. The people who are not counted as looking for a job or employed (or are unemployable) simply do not count as part of the “labor force” and are written off of the statistics.

I agree that 50k is a good number and that the CPS is a well-concieved survey. The BLS in general is a very professional organization, and I don’t doubt their statistics.

I do doubt how they word their statistics. Saying that the “unemployment rate” is (say) 5.7%, when you have (say) 14.5% of the population unemployed and off the labor force is a tad manipulative of words, if not numbers.

I recognize that there needs to be a classification of “unemployable” - the disabled, and obviously children, housewives/husbands and elderly, mainly, but also the homeless and very poor, or those without medical insurance and with a medical problem (like my uncle’s back injury) that prevents them from working - or just not having the will or ability to look for a job. I believe that this is a huge chunk of the population, and this is where the other 30-40% of the people in the F-9/11 case went to.

I would like to see some more detailed statistics on those outside of the “labor force”… but unfortunately, I don’t think that anyone can make a comprehensive survey of many of them, since they do not have addresses, phone numbers, etc. And for some reason, I just can’t see the BLS sending statisticians around Flint, MI door to door conducting surveys in the poorer neighborhoods.