What You Need to Know About the Jobs Report - The New York Times

The jobs report — a monthly scorecard for the United States’ labor market — can ignite presidential tweets, flashing news alerts, and stock market jumps or tumbles. Its estimates of how many people are working (or not) are often interpreted as a key indicator of the economy’s direction.

Of course, no single report can encapsulate something as sprawling and enormous as the United States economy. But the jobs report — which the Labor Department appropriately titles “The Employment Situation” — is one of the better measures of the labor market and, by extension, the economy’s health. It is also one of the broadest, focusing on working families and households.

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The report is based on two separate government surveys that are conducted every month.

Like all statistical measurements, the figures can be both honest and imprecise — a best estimate given the available tools but nonetheless subject to ambiguity, misinterpretation, error and anomalies that need to be ignored. It’s important to keep in mind that every monthly jobs report provides only a temporary and incomplete snapshot of the economy.

Here’s your primer on the report, where the numbers come from and what they mean.

Some key definitions

Employed: Someone with a job. In general, anyone who reports working for pay — even just an hour — during the survey week is considered employed. Nearly 157 million people are counted as employed.

Unemployed: Anyone without a job who actively looked for work (sending out résumés, responding to help-wanted ads) during the previous four weeks, regardless of any government benefits received, is considered unemployed.

Labor force: The combination of people working and those who are unemployed, available and actively looking for a job. In recent months, the size of the labor force has hovered around 163 million.

Not in the labor force: People who are unemployed and not actively looking for work. This group includes people who don’t want to be in the labor force, such as millions of college students, parents happy to stay home with their children and millions of retirees. It also includes people who want to work but are not job hunting, like a former steelworker who, after years of fruitless searching, has given up looking but would take a job if he could find one at an acceptable wage.

Official unemployment rate: The share of the labor force that is unemployed. The monthly average over the past 12 months has been below 4 percent, a historically low figure.

Labor force participation rate: The percentage of the population 16 years and older that is either working or actively seeking work. The figure is important because it represents how many more workers are available to produce additional goods and services. It also reflects the health of the economy. When people in their prime working years — mid-20s through mid-50s — are out of the labor force, it suggests that they don’t see opportunities. This rate has still not returned to its prerecession levels.

Employment-population ratio: The percentage of the population 16 years and older that is working. This figure is a useful measure because it takes into account both the labor force participation rate and unemployment, and is easily compared over time.

How are the data collected?

The monthly employment report is derived from two separate government surveys that serve different purposes. The estimates in each report are revised twice more after their initial release.

The Household Survey

Collected by the Census Bureau since 1942, this survey enables the government to estimate the number of people who are employed and calculate the unemployment rate. It is based on the Current Population Survey, conducted each month among 60,000 households, or about 110,000 individuals from around the country.

Here’s a question that might be asked:

Some people work part time because they cannot find full-time work or because business is poor. Others work part time because of family obligations or other personal reasons. What is your main reason for working part time?

The Establishment Survey

This is based on data gathered each month from 146,000 private business and government agencies covering about 623,000 work sites. Called the Current Employment Statistics program, it is intended to measure changes in jobs created and lost over time.

Conducted by the Bureau of Labor Statistics, it focuses solely on jobs, rather than on individuals. Thus, a single person working two jobs would be counted once by the household survey (one individual is employed) and twice by the payroll survey (two jobs exist).

Which survey provides the better data?

The survey of employers, started in a bare-bones form more than a century ago, is considered a more reliable measure than the household survey, in part because the sample is much larger. But it does not pick up all the types of jobs (the self-employed, unpaid family workers, domestic help and agricultural workers) or answer questions about workers’ race, ethnicity, age and educational level. The household survey helps fill in those gaps.

As a general rule, the monthly numbers are seasonally adjusted. That means the effects of predictable seasonal events like weather changes, major holidays and school schedules are removed (through a statistical technique) so that cyclical, underlying trends can be better observed.

Why are there so many different employment rates?

Unemployment can be defined several ways, and the Bureau of Labor Statistics publishes six different measures. The “official” unemployment rate, and the one most frequently cited, is the percentage of the adult civilian labor force without a job and actively searching for one. The broadest one, which includes both discouraged and underemployed workers — part-timers who would prefer full-time work if they could get it — tends to rise and fall with the official rate but is always larger.

The data also provide a window into how specific demographic groups (African-Americans, women, 25- to 34-year-olds) and industries (manufacturing, restaurants, retail) are faring from month to month.

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