FAQ: How can the unemployment rate rise if the economy is adding so many jobs?
The BLS reported this morning that the economy added 312,000 jobs, but the unemployment rate increased to 3.9% from 3.7% in November.
This data comes from two separate surveys. The unemployment Rate comes from the Current Population Survey (CPS: commonly called the household survey), a monthly survey of about 60,000 households.
The jobs number comes from Current Employment Statistics (CES: payroll survey), a sample of approximately 634,000 business establishments nationwide.
These are very different surveys: the CPS gives the total number of employed (and unemployed including the alternative measures), and the CES gives the total number of positions (excluding some categories like the self-employed, and a person working two jobs counts as two positions).
A couple of key concepts (from the BLS):
The CES employment series are estimates of nonfarm wage and salary jobs, not an estimate of employed persons; an individual with two jobs is counted twice by the payroll survey. The CES employment series excludes employees in agriculture, private households, and the self-employed.And the CPS:
Employed people are those who worked as paid employees; were self employed in their own business, profession, or farm; worked without pay for at least 15 hours in a family business or farm; or were temporarily absent from their jobs.So in December, the headline CES number showed a gain of 312,000 non-farm private jobs (by the definitions above). The CPS showed an increase of 142,000 employed people.
The household survey - employment measure includes categories of workers that are not covered by the payroll survey:
workers in private households
unpaid workers in family businesses
workers on leave without pay during the reference period
Unemployed people are those who had no employment (as defined above) during the reference week; were available for work at that time; and had made specific efforts to find employment in the prior 4 weeks. People laid off from a job and expecting to be recalled are included among the unemployed but unlike the other unemployed, they need not have been looking for employment.
|Civilian Labor Force||162,821||163,240||419|