I think that everyone would agree with me that unemployment is pretty darn high these days. I wanted to explain how they calculate the unemployment statistics, some of the places that it can go wrong, and how we can start to unwind why it is so high still. Today I’m going to focus on how they get to the number you hear quoted in the news.
Unemployment data is gathered by having the BLS call 60,000 households monthly.They believe that this is a large enough sample size that it gives you a good representation of the economy as a whole. Once you take spouses and what not in to account, you end up with about 110,000 people who report monthly.
Basically when you get the phone call you are asked a series of questions to determine:
- Are you employed
- Do you want a job, and
- Are you able/available/looking for work?
If you are able, available and looking for work, but do not have a job, that is when you get classified as unemployed.
The way they calculate the actual percentage statistic that you hear quoted is by taking the number of unemployed and dividing it by the total number of people in the labor force (employed + unemployed).
If you don’t want a job, you are classified as “Not in Labor Force” or NILF as like to call it. Hey it rhymes with MILF and gets a good giggle out of a room of 20-year-old boys. Do you see why I don’t want my employers to know about this blog???