Explained: US jobs data are in. How are they calculated?

The PLFS covered 4.3 lakh people across 1.02 lakh households. It found the unemployment rate in the urban workforce was 7.8%, and that in the rural workforce was 5.3%.

The system in the US

So, how does the United States collect and declare employment numbers?

This exercise is carried out by the United States Bureau of Labour Statistics (BLS), a wing of the US Department of Labour. Early every month, the BLS announces the total numbers of employed and unemployed people in the country in the previous month, along with many characteristics about them.

Some of the questions that the BLS’s monthly bulletin seeks to answer include: How many people are unemployed? How did they become unemployed? How long have they been unemployed? Are their numbers growing or declining? Are they men or women? Are they young or old? Are they White, or Black, or Asian, or of Hispanic ethnicity? How much education do they have? Are they concentrated in one area of the country more than another?

The BLS says that these statistics, together with other economic data, can be used by policymakers to determine whether measures should be taken to influence the future course of the economy or to aid those affected by joblessness.

Where do the numbers come from?

On its website, the BLS explains that it neither carries out a physical count of the unemployed people across the country, nor does it go by the numbers of Unemployment Insurance (UI) benefits collected by people under programmes run by the federal or state governments.

This is because contacting every home across the US every month is simply not practical or feasible; and the UI numbers are not reliable simply because, as the BLS says, “some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for these benefits”.

What the government therefore does, is to conduct a monthly survey called ‘Current Population Survey (CPS)’ to measure the extent of unemployment. The CPS has been conducted continuously every month since 1940, and has undergone several design changes since then in order to ensure it scoops up the most comprehensive and relevant information.

The survey is carried out among 60,000 eligible households. This sample translates into approximately 110,000 individuals each month, which is very large in comparison to the usual public opinion surveys in the US.

The CPS sample is selected so as to be representative of the entire population of the US. All counties and independent cities are grouped into approximately 2,000 geographic areas or sampling units; the US Census Bureau then designs and selects a sample of about 800 of these geographic areas to represent each state and the District of Columbia. The sample reflects urban and rural areas, different types of industrial and farming areas, and the major geographic divisions of each state.

“Every month, one-fourth of the households in the sample are changed, so that no household is interviewed for more than 4 consecutive months. After a household is interviewed for 4 consecutive months, it leaves the sample for 8 months, and then is again interviewed for the same 4 calendar months a year later, before leaving the sample for good. As a result, approximately 75 percent of the sample remains the same from month to month and 50 percent remains the same from year to year. This procedure strengthens the reliability of estimates of month-to-month and year-to-year change in the data,” says the BLS.

Census Bureau staff contact, either in person or by phone, the 60,000 eligible sample households every month to ask about labour force activities (jobholding and job seeking) or non-labour force status of the members of these households during the survey reference week (usually the week that includes the 12th of the month). This, and other information is collected using a computerised questionnaire.