Posted July 10, 2010 in the Wisconsin State Journal
Q: The recession has focused increased attention on the unemployment rate. Critics say the rate doesn’t adequately capture the breadth of the labor problem. How is it calculated? A: One of the primary misconceptions about the unemployment rate is that the federal government somehow counts every single unemployed person individually. To do so would be impractical and expensive — akin to doing a census every month instead of every decade. So the federal government surveys about 60,000 households each month. Wisconsin’s portion of the sample is just over 1,000 households, said Eric Grosso, a senior economist with the state Department of Workforce Development. Only those people without a job who have tried to find work in the prior four weeks are considered unemployed, Grosso said. “People who drop out of the workforce aren’t counted,” he said. “You need to be actively searching for a job.” That’s because the government, in order to figure out the unemployment rate, needs to know how many total people are either employed or available to work right then, Grosso said. This is called “the labor force,” and it eliminates those who are imprisoned, confined to nursing homes, under age 16 or otherwise not employable. People who aren’t looking for work because they’ve given up all hope also are among those considered “not in the labor force,” according to the federal Bureau of Labor Statistics. To capture those people, the government does a separate calculation, one that rarely gets publicized. It counts people “marginally attached to the labor force.” This figure includes individuals who say they still want a job and have looked for work in the last year. They just haven’t actively searched in the last four weeks. In June, the official U.S. unemployment rate — the one we all heard about — was 9.5 percent. Meanwhile, the rate of total unemployment, including those marginally attached to the labor force, was 16.5 percent.
