Quiz Time: Who is unemployed?

The current unemployment data and what it means

In our dive into the current data, we’ve covered growth. This time we’ll look into unemployment.

Late in 2022, I received the Current Population Survey (CPS) from the Census Bureau. The survey’s main purpose is to help determine the unemployment rate, another valuable indicator of the economy’s health. The CPS showed that I wasn’t in the labor force, which meant I wasn’t unemployed. So, who is?

1. During the pandemic, Julia couldn’t find work and was a little intimidated by the idea of returning to work when so many people were still getting sick. She decided to retire and collect her social security benefits instead.

2. During and after the pandemic, Chris kept looking for work, taking any job he could get for as many hours as he could get. Without his GED, he’s currently working for about 10 hours a week as a janitor for a small shop. Jamie keeps looking for a better job with more hours.

3. Leanna collects her unemployment benefits, but instead of going back to work at her job as a server at a restaurant has decided to go back to school and get her degree.

4. Marcus, who has a college degree, looks for work each week, even though his unemployment benefits have run out.

5. April was laid off her warehouse job after the collapse of the Francis Scott Key bridge. Her boss tells her that she’ll be brought back as soon as there’s enough work.

The answers are 4 and 5. Why?

I wasn’t unemployed because I wasn’t actively looking for work. I started a new writing, but I wasn’t looking for a job. The Bureau of Labor Statistics (BLS) uses information from the CPS to measure the unemployment rate.

Unemployment is the inability to find work. In a few weeks, after we finish our crash course on inflation, we’ll look at the problems and solutions associated with unemployment. For now, we need to separate the technical definition of unemployment from the requirements for unemployment benefits.

Marcus is unemployed because he fits the technical definition of unemployment. What is the definition? The CPS will count you as unemployed if you don’t have a job and are actively looking. If you’re not looking, you’re not unemployed, even if you’re collecting unemployment benefits. You’re not in the labor force.

According to the BLS, actively looking means that the unemployed worker is making one specific, active effort to find a job during the 4-week period ending with the survey reference week OR they were temporarily laid off and expect to be recalled to their job. People waiting to start a new job must have actively looked for a job within the last 4 weeks in order to be classified as unemployed. 

April is expecting to get her job back, so she’s in the second category. [3]

This week, we’ll use two reports, one from the BLS and one from ADP, to study unemployment.

Unemployment

According to the BLS, unemployment is still low—3.9 percent. Since its lowest rate, 3.4 percent early in 2023, the rate has risen, but not by much. Job growth is slowing, as is the rate pay is rising. That means that the number of new jobs created is less than it has been. Even so, there are still about 1.3 jobs available for every person looking.

Black unemployment rates are down, after a blip in March, to 5.6 percent with an 18.2 percent rate for ages 16-19. Still too high but improving. According to the Pew Research Center, Black unemployment has historically been twice that of white workers. The trend is only a bit lower, at about 1.8 times, post pandemic.

Digging deeper into the ADP Unemployment Report, all regions of the country gained jobs, except for an insignificant loss in the West North Central division. Employees who stayed got 4.8 percent annualized pay hikes, while job leavers got higher salaries. Women got slightly higher raises among job stayers than men at all ages, except those between 25-34, where salary adjustments were about the same.

The number of workers added to private payrolls is up, especially in leisure and hospitality, construction, and education services. Hourly earnings month over month are up, helping ease inflation woes.

Speaking of inflation, we’ll return to that next time. Up first, I’ll have a report on its current state. Then we’ll resume our crash course on inflation. In case you’ve missed one, the following posts introducing the course and the problems with inflation are here: A Penny Here, a Penny There, Feeling the Pinch of Inflation, and Different People, Different Inflation.

Thank you for reading. I appreciate your support,

Nikki

[1] For the definition of actively looking, see the BLS definition.

[2] The BLS collects unemployment data using several categories. One tracks this narrow definition I’m using and is called U-3. Underemployed and discouraged workers are part of U-6. The two estimates closely track each other during the business cycle.

[3] Under the Port of Baltimore Emergency Assistance Program, April probably got her job back.