Cape Gazette
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Explain how unemployment figures dropped

By Bill Lee | Mar 16, 2013

I don't profess to be a mathematical genius, but can someone explain to me how the following is arrived at?

For example: The government reports the unemployment figures dropped from eight percent to seven-and-a-half percent because the number of unemployment claims went down.  However, at the same time, it's reported that a figure many times larger than the above, either no longer qualify for unemployment benefits and/or have given up seeking employment.

Are they not unemployed?  If  so, are they in limbo and no longer count for anything?  If someone can explain this it would be greatly appreciated. Thank you.

Bill Lee
Ocean View

Comments (1)
Posted by: Thomas Adams | Mar 17, 2013 13:41

One piece of the answer is that your premise is off!  The national unemployment rate does not necessarily go down when the number of claims filed for unemployment does.  That is because the number is jobless claims is not a factor in calculating the unemployment rate.  To calculate the unemployment rate, the Bureau of Labor Statistics conducts two types of surveys each month.  One type is administered to about 60,000 households.  The second type covers about 145,000 businesses and government agencies that in turn represent about 557,000 work sites.

 

The number of jobless claims goes down when people have found jobs or—as you point out—when they have reached the end of their eligibility for benefits or when they are so discouraged that they have stopped searching for jobs.   Some people find jobs after they go off unemployment benefits and some don’t.  People who have stopped searching for jobs probably don’t find them.

 

It’s useful to look at various measures to determine whether the labor force is expanding or contracting because each has its strengths and weaknesses.  Another measure to watch is the national employment report compiled by APD, a private company.  This report tracks the number of people on payroll.  If payroll numbers are trending up and if jobless claims and the unemployment rate are trending down, then that’s good news.  And that’s what is happening.  But slowly, very slowly.

 



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