Repost - Unemployment Measures and what they mean.

[Kber]

There are a bunch of reports on unemployment and they all measure different things with different methods.

For starters, the government releases a report each Thursday of "new claims" and "continuing claims". New Claims are people filing for UI for the first time. This represents job destruction. Continuing claims measures how many people who have previously applied continue to receive benefits. If the number goes down, it can be for two reasons: one is that more people are finding jobs and the other is that people are exhausting their 6 months of regular insurance. The weekly claims report does not report on why people are no longer receiving benefits, just that the continuing claim number is going up or down. Neither the New Claims or Continuing Claims says anything about job creation or people moving into new positions.

This report also includes a 4 week moving average that is supposed to smooth out statical bumps caused by holidays, snow storms and other similar events. The 4 week average is considered a more reliable number.

Monthly, ADP, a private payroll company releases its estimate of the number of jobs lost or created in the past month. They release this report the Wednesday prior to the release of the official government unemployment. The ADP report is based on their own payroll numbers, does not include any public jobs (including teachers, soldiers, etc) and has only been in use since the early 1990's. However, their has been a correlation between their report and the Government numbers released two days later.

The first Friday of every month, the government releases two reports. The first, like the ADP report, attempts to measure the number of jobs in the total economy and compares the difference to prior months. They arrive at the total jobs via a combination of surveys and estimates. The small business economy is apparently difficult to survey and the estimates for small business creation are considered the least reliable part of the report.

The second report that the government releases at the same time is the unemployment report. The unemployment figure is based on a survey of random households. You are considered "unemployed" if you indicate that you are out of work, but are actively seeking employment. The other thing this survey captures is the size of the labor market. For example, if your son recently graduated from high school and is now starting to look for a job, both the labor market and the unemployed population grow by 1.

There is another report that captures not just people actively seeking work, but previously employed individuals who have become so discouraged that they are no longer looking as well as people who are under employed (i.e. working as a part time consultant because full time work is not available). Both unemployment reports measure survey participants status (working, looking, discouraged, etc) based on how participants self identify. Receiving unemployment benefits have nothing to do with either of these reports. (You don't have to be collecting UI to be counted.)

I think that's all, but if I've forgotten anything, please fill in the gaps.

Thank you.

[Clio the Leo]

1. thank you nt