Every time they announce the “Jobless Rate” they specify it in terms of “first time applications for unemployment benefits.”
Why just the first time? What about all the other people in their 2nd, 3rd, etc weeks of application?
And, when they talk about people who have ‘given up searching’ are they just talking about people whose benfits have run out, or can they really tell who has stopped looking?
Thanks,
I’m sure someone will come along to explain the intricacies of unemployment rate calculations, but the first time application metric is always distinct from any unemployment metric, and is used more to measure the expected rate of change in the figures.
The most commonly reported unemployment rate is compiled by a household survey asking if people have jobs and if they have tried to seek employment in the last four weeks. People sometimes summarize the people who are unemployed and haven’t looked for work in the last four weeks as people who have “stopped looking”, but this is an oversimplification. The point is not to count people who have retired, gone to school, are in prison, stopped working to raise children, are too sick to work, etc. etc.
There’s not a single unemployment number that encompasses all possible scenarios.
The Depaertment of Labor’s Bureau of Labor Statistics counts a lot of different things and slices the data in a lot of different ways.
First time jobless claims is one measure of how the economy is doing. So is how long people have been unemployed. So is how many people have taken part time jobs because they can’t find a full time job. All of these things are data points that get collected and are used in economic analysis.
This page at the BLS website gives an exhaustive amount of detail on their methodology.
Two reasons that first-time applicants for unemployment gets reported so often is that it 1) relies on data that is easily collected with minimal interpretation and 2) can be gathered and released very quickly.
You’ll notice that neither of these reasons is “provides good information about overall unemployment.” It’s the informational equivalent of fast food, especially when the news reports it as evidence for things it wasn’t meant to measure.
I think the “first time applications” is a good indicator of how the economy is doing right now, because it is specific to how many people lost their jobs this week (month, or whatever), as opposed to other figures which are more cumulative, since they include people who lost their jobs long ago.
I forgot what the actual calculations were and I’m sure they changed when I was an econ major, but the overall rate that is quoted is a pretty good idea of what the actual employment picture. In times like this, the number may be more misleading because at some point (I believe it’s 6 months, don’t quote me here) the government counts you as out of the workforce. Yes, it’s oversimplistic, but it’s meant to be used as a quick an easily digestible factoid. The number of new applicants is pretty good too, but, imo, not as good as the general number because depending on the season/month there could be fluctuation (Christmas workers, sasonal labor, summer college employment, etc.)
hmmm the jobless rate and initial claims for unemployment insurance are completely seperate things and you shouldn’t have heard them linked like that.
Here’s the UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORTreleased by the Employment and Training Administration of DOL every Thursday. First we see Intial Claims for the previous week, seasonally adjusted, not seasonally adjusted, and 4 week moving average. This is a good early indicator for the job market and, since it’s the most timely, the one that gets the most attention. It’s subject to revision for the next 2 weeks as many times states don’t get all their numbers in on time.
Next is Insured Unemployment, and that’s what you’re asking about. It’s the total number of people receiving UI benefits through the regular State programs as of 2 weeks earlier. Again seasonally adjusted, unadjusted, and moving average.
Next is Initial Claims in Federal Programs (Federal workers and recently discharged veterans). These are administered through the State offices, but funding comes from the Federal Government. Because of the low size, they are not seasonally adjusted.
And last is total recipients from all programs, including Emergency and Extended Benefits. These aren’t covered in the regular state programs.
For the Official Unemployment rate, the numbers come from a monthly survey of approx 60,000 households, conducted by the Census Bureau for the Bureau of Labor Statistics. The Universe for the survey is everyone in the US age 16 and older who is not in the military, prison, or an institution.
This Population is broken into 2 groups: Labor Force and Not in the Labor Force. The Labor Force is Employed plus Unemployed where Employed is defined as worked at least one hour for pay or 15+ hours unpaid in a family business or farm during the survey reference week (usually the week that contains the 12th).
Unemployed is defined as did not work during the reference week, could have started a job that week if offered, and actively looked for work in the 4 weeks ending with the reference week.
The UE rate then is Unemployed divided by the Labor Force.
Everyone else…those not working and not currently looking for work…are Not in the Labor Force.
If a group of GOP lawmakers have their way, you won’t have to worry about the Unemployment rate anymore.
But they do. Consistently. That’s why I asked about something that seems so wrong.
The problem is, “times like this” have been going on for several years now, and don’t seem likely to go away anytime soon, notwithstanding the government’s vaporware promises of a major economic boom coming along any day now.
This is why people are starting to pay more and more attention to the so-called “Real Unemployment rate” which attempts to count people who have lapsed off the official unemployment numbers, or who are underemployed (ie, forced to take a menial/part-time job because they couldn’t find work in their field). Last I heard, the Real Unemployment rate is somewhere around 10%.
This isn’t true. The headline unemployment number counts you as part of the workforce as long as you say you are still looking for work . How long you’ve been unemployed is irrelevant. See the above link to the BLS site.
Can you point us to an example? I’ve often heard them mentioned in the same report, though they come out at different times, but I’ve never heard them linked.
It is true. See discouraged worker. It’s 12 months, btw, I thought it was 6. These people are considered in the frictional unemployment calculation. That’s why there are so many calculations. As I said before, the number you hear most reported is the quick and dirty caluclation. Statistics is nearly impossible to report without a subjective overtone. For instance, my cousin who has been habitually unemployed for 5 years will say he is looking for work, when everyone will see him as unemployable. He’ll always answer the survey as being unemployed, but the statistician will count him in the frictional statistic.
ETA: people have always thought that the unemployed number is always higher than reported to truly account for those who really do have bad luck unlike my aforementioned cousin. At some point, though, the cut-off has to objectively determined.
It isn’t true. From your cite “The Bureau of Labor Statistics does not count discouraged workers as unemployed”.
There are alternative measures that count them, but they aren’t part of the “overall rate that is quoted” as you said in your first post.
Apologies, let me restate in a different way what I stated already to be more clear: the headline unemployment statistic counts the unemployed worker as part of the unemployment statistics until 12 months have passed.
This isn’t true. Again, the BLS link gives the definition they use for “unemployed”. It isn’t based in any way on how long someone has been out of work. All that matters is that they aren’t working and that they’re still seeking to become employed (with some caveats for things like longterm illnesses, etc).
Honestly, I think the “real” unemployment rate is getting play simply because it serves to make Obama look bad.
The U3 “official” unemployment rate has been calculated the same way for 70 years. In more recent years they have added discouraged and marginal workers to other measures, like the U4 or U6 unemployment rate.
Here’s a site that has both.
The reason people want you to pay attention to the higher U6 rate is that we’ve grown up with the lower U3 rate, and naturally think in those terms. So when you say the “real” rate is higher, it implies that the 7.5% should really be 14%, and isn’t 14% unemployment really bad? Well, 14% U6 isn’t necessarily that bad, because it’s a totally different measurement.
As others have said, the two numbers are not usually reported as the same thing. They are often reported on in the same report, but a careful reading or listen usually shows that they are separate. It’s certainly not a consistent problem.
A quick search of news reports for “first time unemployment” and “unemployment rates” didn’t show a single case of the two being used as the same thing.
Indeed, if you look at the rise in both measures, they tell almost exactly the same story. U3 is up 75% from its pre-Recession low, and U6 is up almost the exact same percentage.
But instead people try and switch between measures to make things seem worse. U6 is twice U3, which seems really bad, but U6 was twice U3 during good economic times as well.