Are Unemployment Rates Really Going Down?

Payscale

unemployment ratesHow accurate is the unemployment rate? As it goes up and down each month it causes a lot of people, particularly those looking for work, quite a bit of stress. Do you ever wonder if it can really be trusted? Or, whether it matters for you and your job security? Let's look at why and why not.

The unemployment rate is a complicated calculation, and it gets more complicated during times of economic turmoil. This is because the Bureau of Labor Statistics, which calculates the unemployment rate, makes certain assumptions about the number of working-age people in the economy during certain seasons of the year and creates a "seasonally adjusted" number. That's the one you hear about in the news.


But, this adjustment may not be as accurate when the economy is struggling.


Why does the BLS adjust employment numbers for seasonality?

Nearly every year, the unemployment rate spikes in January and June, with unemployment up about 1 percent in January over December, and up about 0.5 percent in June over May.

The reasons for these spikes are simple. A lot of temporary retail workers that had a job in December for the holidays are unemployed in January. Similarly, about 4 million students graduate from high school each June and go from being "employed" as students in May to "unemployed" workers looking for work in June.

These seasonal adjustments are critical to understanding where the economy is going. They make for more accurate comparisons from month to month so we don't all freak out every January and June. Let's see how they affected our results for January 2011.

At the beginning of February 2011, you likely heard in the news that, "The January 2011 BLS report states that the unemployment rate fell by 0.4 percentage points to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000)." Hearing this, you may have thought, "Wow, that's great news." You were celebrating the seasonally adjusted number.

Had you heard the unadjusted statistics explained, you may not have been so happy. You would have heard something like, "The January 2011 unemployment rate of 9.8 percent was 0.7 percent higher than the rate for December. Similarly, January nonfarm payroll employment was down 2.9 million from December's number." Uh-oh, that's all bad news.

The adjustments can help keep actual statistics in perspective, but they are harder to make during a recession because, if the retail sector is dead, for example, there is no significant increase in unemployment in January for retail workers, because there wasn't an increase in employment for these workers in December, as in typical years.

The result is that the BLS does the best it can to figure out which changes in unemployment are long term, and which are just seasonal variations. It just can't do a great job in strange times like these, so the BLS sometimes produces reports, like January's, that may not provide a clear picture of how the employment situation is really faring. It's hard to say.


What should you do?

1. Try to not focus too much on the unemployment numbers you read. Know that they are full of uncertainty.

2. Don't read too much into one month's seasonally adjusted result.

3. Look at the raw (not seasonally-adjusted) unemployment rate for a month compared to the rate in the same month the year before (year-over-year rather than month-over-month). This gives a clearer picture of where we really are with unemployment.


Check out that rainbow ...

If you follow these suggestions and look at the long sweep of the whole past year for the raw unemployment rate, it is pretty clear the economy has turned a corner. Since August 2010, the raw unemployment rate has been lower every month than the rate a year before.

Even better, since October, the rates have averaged 0.5 percent lower than the rate a year before. There is some evidence this improvement is accelerating, with January 2011's unemployment rate down a full 0.8 percent from January 2010.

The next big question is whether unemployment will drop quickly, as it did after the severe recession of the early '80s, or whether it will drop more slowly, as it did after the less severe recessions of the early '90s and '00s. Which route we take will become clearer in the next few months.

Want to see what all of this information looks like? Check out the chart and table below to dig into all the details of raw unemployment rates. The unemployment rates for the last 30 years look like waves on the ocean, but there are a lot of people looking for work in all those numbers.


Unadjusted unemployment rate by month



Unadjusted Unemployment Rate By Month

Source: BLS

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
1980 6.9 6.8 6.6 6.7 7.1 7.8 7.9 7.6 7.2 7.1 7.1 6.9 7.1
1981 8.2 8.0 7.7 7.0 7.1 7.7 7.3 7.2 7.3 7.5 7.9 8.3 7.6
1982 9.4 9.6 9.5 9.2 9.1 9.8 9.8 9.6 9.7 9.9 10.4 10.5 9.7
1983 11.4 11.3 10.8 10.0 9.8 10.2 9.4 9.2 8.8 8.4 8.1 8.0 9.6
1984 8.8 8.4 8.1 7.6 7.2 7.4 7.5 7.3 7.1 7.0 6.9 7.0 7.5
1985 8.0 7.8 7.5 7.1 7.0 7.5 7.4 6.9 6.9 6.8 6.7 6.7 7.2
1986 7.3 7.8 7.5 7.0 7.0 7.3 7.0 6.7 6.8 6.6 6.6 6.3 7.0
1987 7.3 7.2 6.9 6.2 6.1 6.3 6.1 5.8 5.7 5.7 5.6 5.4 6.2
1988 6.3 6.2 5.9 5.3 5.4 5.5 5.5 5.4 5.2 5.0 5.2 5.0 5.5
1989 6.0 5.6 5.2 5.1 5.0 5.5 5.3 5.1 5.1 5.0 5.2 5.1 5.3
1990 6.0 5.9 5.5 5.3 5.2 5.4 5.6 5.5 5.6 5.5 5.9 6.0 5.6
1991 7.1 7.3 7.2 6.5 6.7 7.0 6.8 6.6 6.5 6.5 6.7 6.9 6.8
1992 8.1 8.2 7.8 7.2 7.3 8.0 7.7 7.4 7.3 6.9 7.1 7.1 7.5
1993 8.0 7.8 7.4 6.9 6.8 7.2 7.0 6.6 6.4 6.4 6.2 6.1 6.9
1994 7.3 7.1 6.8 6.2 5.9 6.2 6.2 5.9 5.6 5.4 5.3 5.1 6.1
1995 6.2 5.9 5.7 5.6 5.5 5.8 5.9 5.6 5.4 5.2 5.3 5.2 5.6
1996 6.3 6.0 5.8 5.4 5.4 5.5 5.6 5.1 5.0 4.9 5.0 5.0 5.4
1997 5.9 5.7 5.5 4.8 4.7 5.2 5.0 4.8 4.7 4.4 4.3 4.4 4.9
1998 5.2 5.0 5.0 4.1 4.2 4.7 4.7 4.5 4.4 4.2 4.1 4.0 4.5
1999 4.8 4.7 4.4 4.1 4.0 4.5 4.5 4.2 4.1 3.8 3.8 3.7 4.2
2000 4.5 4.4 4.3 3.7 3.8 4.1 4.2 4.1 3.8 3.6 3.7 3.7 4.0
2001 4.7 4.6 4.5 4.2 4.1 4.7 4.7 4.9 4.7 5.0 5.3 5.4 4.7
2002 6.3 6.1 6.1 5.7 5.5 6.0 5.9 5.7 5.4 5.3 5.6 5.7 5.8
2003 6.5 6.4 6.2 5.8 5.8 6.5 6.3 6.0 5.8 5.6 5.6 5.4 6.0
2004 6.3 6.0 6.0 5.4 5.3 5.8 5.7 5.4 5.1 5.1 5.2 5.1 5.5
2005 5.7 5.8 5.4 4.9 4.9 5.2 5.2 4.9 4.8 4.6 4.8 4.6 5.1
2006 5.1 5.1 4.8 4.5 4.4 4.8 5.0 4.6 4.4 4.1 4.3 4.3 4.6
2007 5.0 4.9 4.5 4.3 4.3 4.7 4.9 4.6 4.5 4.4 4.5 4.8 4.6
2008 5.4 5.2 5.2 4.8 5.2 5.7 6.0 6.1 6.0 6.1 6.5 7.1 5.8
2009 8.5 8.9 9.0 8.6 9.1 9.7 9.7 9.6 9.5 9.5 9.4 9.7 9.3
2010 10.6 10.4 10.2 9.5 9.3 9.6 9.7 9.5 9.2 9.0 9.3 9.1 9.6
2011 9.8


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Needs Vacation

It's quite clear the DLS reported unemployment rate is deceiving.
2011: 1.6 million people filed for unemployment insurance each month
2011: 100,000 new jobs were added each month
That leaves an average of 1.5 million people every month out of work seeking employment

Ask yourself, how can the unemployment rate go down when there are 16 times more people laid off each month than new jobs created?

Don't believe a work the DLS says. Deceiving statistics creates a false security.
If the true unemployment rate (true rate: 16%) was reported it would cause more economic unrest, and at this time that would be catastrophic.

December 22 2011 at 10:22 AM Report abuse rate up rate down Reply
randrand

i got all my exotic weapons and such legally----now would be a dandy time to make use of such entities in a very unacceptable display---it is called a revolution; when the have-nots will say "ENOUGH IS ENOUGH"-AND T-H-A-T IS WHY "THEY FEAR US"---THE FOOLS HAVE PUT THE WEAPONS OF THEIR OWN DOWNFALL INTO O-U-R HANDS. PASSING EMERGENCY DIRE LAWS TO DISCOURAGE INSURRECTION-IS A BIT LIKE CLOSING THE BARN DOOR AFTER THE HORSES HAVE BOLTED.

April 22 2011 at 11:44 PM Report abuse rate up rate down Reply
Charles Carter

Years ago when I was laid off, the unemployment office was worthless. I was checking places that had been closed for some time and others that had stacks of applications. I checked the yellow pages for types of places I'd had experience and was trying to decide which of two of them or one I'd found just driving around when my old company called me back.Think they got tired of replying to all the places I'd applied.

March 03 2011 at 3:26 AM Report abuse rate up rate down Reply
Holly

Unemployment rate was 7.1 when Obama took office. The lowest it's been during his administration was after his first month in office at 8.5. It hasn't been that low since and now sits at 9.8. I thought that giant stimulus package that the Dems passed throwing us deeper in debt was suppose to create jobs. Where are the jobs, Obama? Maybe,the teleprompter will tell you.

March 03 2011 at 3:11 AM Report abuse rate up rate down Reply
Scott

My unemployment ran out this week. Now - I will be counted as employed next week in the statistics. Great system.

March 03 2011 at 1:46 AM Report abuse rate up rate down Reply
Mike H

God damnit !!! I've been out of work almost 3 1/2 years and applied at over 3,200 companies. I apply and send out ten to twenty resumes and fill out several applications EVERY GODDAMN DAY. I have a college degree and three trade school certificates. It's always either I'm under qualified or over qualified (over aged). The problem is I'm in my 40's. and because of the deliberate destruction of the economy (by the fed and Wall street) along with massive unemployment, employers are only looking to hire people 29 or younger. They also want specific and extensive experience I’ve applied for full time, part time, contract, etc every Goddamn job I can qualify for. I’m not picky, I’ll take anything. I’m registered with thousands of agencies. Occasionally I get a call from an agency but when they submit my resume they say the company wants someone younger. I’ve heard this dozens of times over the last few years.

I'm a hard and reliable worker but I'm been laid off several times over the last 6 years due to outsourcing and because in California they want Hispanics not English speaking whites. God fucking damn our piece of Goddamn shit government for letting the economy crumble while they laugh and live in luxury with their 6 digit salaries and 6 digit pensions. God Fucking damn this Goddamn fucked up country.


If this is a nation under God, than God must have taken a giant steamy dump

NO MORE GOD BLESS AMERICA LAND OF THE FREE

the new slogan

GODDAMN AMERICA LAND OF THE GREED

March 02 2011 at 8:04 PM Report abuse rate up rate down Reply
2 replies to Mike H's comment
Bill

Your problem Steve, is that YOU think YOU have a "right" to a job. You don't, and no one does. Whether a family farm, giant corporation or a corner franchise store business, NOT ONE was established to give YOU a job. They are created and operated to bring profit to those that invested their own precious capital in the enterprise. If it also employs people, then the owner is giving a blessing at the cost of a headache for himself, not paying a debt.

If you want a guaranteed job, make your own by building a successful business for yourself. It will only cost you your entire family fortune, fifteen to twenty hours of very hard work per day doing several different tasks that would each require another expensive employee, work 6.5+ days per week without vacations or holidays, (MUST have the holiday sale) and a decade or so to actually start getting comfortable... that is if your business doesn't fail first. Then, if you are successful, after a only few years of "plenty" you discover the government wants ALL that YOU have built to support a pile of self-absorbed, entitled "Steves" who believe THEY "earned" taking everything the owner has built.

How many "$5 foot-long" sandwiches does that non-union sandwich shop owner have to sell just to cover the rent and overhead? Since even at a rock-bottom price the shop already sells every sandwich possible, will paying his pimple-faced worker $16/hour + Obanana's LIEberal benefits INCREASE or DECREASE his ability to stay open at all?

Until YOU are willing to pay your neighbor that exact same "living wage" YOU demand through a union or regulation, YOUR job will end up elsewhere. Stop blaming "corporations" and "politicians" for the stupid purchasing decisions YOU voluntarily make. If YOU DON'T "BUY AMERICAN" EXCLUSIVELY, YOU should permanently lose YOUR own job first!

Now that you know this, instead of wasting more days sending out "Thousands of resumes," why not spend all of your time CREATING your own business, and GIVE some OTHERS jobs?

March 02 2011 at 11:18 PM Report abuse rate up rate down Reply
randrand

mike-LISTEN TO ME AND FOLLOW-WE INTEND TO USE YOUR TALENTS IN AMERICA--WHAT THEY ARE HIRING NOW---YOUNGSTERS-LOOK GOOD ON PAPER, BUT WILL NOT FIRM THE RANKS FOR THE COUNTRY WHEN CRAP HITS THE FAN. THEY HAVE NO BENEFITS, AND WILL SOON BE WORN OUT. THEY WILL SEE THROUGH THE LIES-AND BEYOND THAT-THE COUNTRY, MOST ASSUREDLY, WILL BE HIT CATASTROPHICALLY BY AN EVENT OF DESTRUCTION. IN THOSE MOMENTS-WE NEED THE MODERATE AND MIDDLE-AGED EXPERIENCE TO STABILIZE THE ECONOMY. I WAS A STETSON GRADUATE, IN SECURITY FOR THIRTY YEARS-AND I SEE THE FUTILITY IN REAL GROWTH OF THIS ECONOMY IF THEY KEEP OUTSOURCING, HIRING YOUNG FACES, AND SHOWING NO INCENTIVES. THE FREAKIN' ECONOMY WILL COLLAPSE-AND NOT EXPANDING MEANINGFUL, LONG-TERM JOBS-IS JUST GONNA HASTEN THE CASCADE OF DEMOLITION. YOU ARE QUALIFIED---THE ECONOMY "IS LACKING AND NOT WORTHY OF ACCOMODATING YOUR TALENTS'! THAT IS A REAL SICKNESS-AND IT WILL KILL THE AMERICAN WORKING SPIRIT IF NOT TRANSFORMED TO ENGAGING THAT TALENT.

April 22 2011 at 9:55 PM Report abuse rate up rate down Reply
Charles Carter

I t is common knowledge that the actual number of the jobless is far more than just those classified as unemployed. But, if that makes you feel uneasy, just go with only how many they say are unemployed.

March 02 2011 at 7:48 PM Report abuse rate up rate down Reply
1 reply to Charles Carter's comment
randrand

THEY ARE INFLATED FIGURES OF OPTIMISM-OBAMA HAS-EXACTLY WHAT ISSUE-TO HANG HIS REELECTION HAT ON?1 HE IS A FATALLY FLAWED ONE-TERM PRESIDENT, AND UNLESS WE STOP BLEEDING EXCESS MONEY IN WARS AND NON-INVESTMENTS IN UNITED STATED PRODUCTION----WE AIN'T GONNA ACCOMMODATE A VERY ANGRY POPULATION." PUNDIT-IZING THE ISSUES" AS TO WHO GETS A JOB-WILL BE SNOWED-UNDER BY ANGRY REVOLUTION-AND YOU FOLKS HAVEN'T EVER DEALT IN THAT ELEMENT!y Your little computers and social jollies and entitlements all get swept away by guns marching-and then you can't rvrn hide on the blog and be smug, or sass.BELITTLING THE ANGER THE UNEMPLOYED FEEL IS JUST PART-AND-PARCEL OF THE CLASS WARFARE MISCONCEPTION ISSUES. YOU ARE ALL ON THE EDGE OF YOUR LAST PAYCHECK, AND HAVE NO REAL POWER TO REMAIN EMPLOYED! THE BLOG ARROGANCE OF THESE FOLKS SPEAKS VOLUMES AS TO WHY AMERICA IS ARMED-AND ANGRY. THESE BLOGGERS HAVEN'T EVER COME OUT FROM BEHIND THE KEYBOARD AND LAID HOLD OF THE WEAPONS-BUT THEY MIGHT SOON WISH THEIR WORDS WERE MADE SOFTER-THEY MAY BE HARD TO SWALLOW, IN TIME. I RESPECT FEAR AND UNCERTAINTY-EVEN ANGER. THE DISCONNECT IS SHOWN BY THOSE IN DENIAL-AND THEIR EXHIBITED ARROGANCE TOWARDS OTHERS.

April 22 2011 at 10:12 PM Report abuse rate up rate down Reply
wert

soo if 23% of the workforce is drawing food stamps,, isnt that 23% unemployment?? The wizard of alls

March 02 2011 at 7:27 PM Report abuse rate up rate down Reply
1 reply to wert's comment
randrand

AND THE HELL-OF-IT IS--THESE PEOPLE COULD EASILY BE EMPLOYED AND PRODUCTIVE IN JOBS THAT LEADS TO FUTURE GROWTH. WE ARE STIFLING OUR OWN RECOVERY WITH UNPRODUCTIVE VISION AND INVESTMENT STARVATION.THE KEY IS NOT TO CUT BACK, BUT EXPAND WITH OPEN-ENDED NEW POSSIBILITIES THAT LEAD TO INNOVATION-AND BIG INCENTIVES THROUGH THAT CREATIVITY. IF WE LOSE THE RESPECT OF GRADUATES FROM OUR COLLEGES AND UNIVERSITIES, I DOUBT THE SUB-SHOP WORKER MAKING SANDWICHES IS GONNA CREATE NEW FORMS OF ENERGY OR DYNAMICS OF SPACE TRAVEL. KILL THE RESPECT AND EDUCATED NURTURING, YOU CAN EASILY KILL THE SOCIETY. WHAT A SHAME YOU ALL DO NOT SEE THE FOREST FOR THE TREES!

April 22 2011 at 10:21 PM Report abuse rate up rate down Reply
Bill

Government spending is what keeps the PRIVATE sector in business. We clean up the messes they make, we fight their illegal wars, we defend them when sued by other countries. We provide roads, bridges, sewers, water, and protection services that allow them to make a profit. We have provided trillions in College Level research and development that has allowed tens of thousands of companies to profit from our taxpayer funds. We have provided trillions via the NASA space program and our Military in new products and have supplied the corporate machine a fluid market, funded by the taxpayers. We have provided abundent power at very low cost that fuels the corporate machine. We have provided millions of very well educated people that run the corporations and small businesses of America. The Corporate World owes MUCH to the Taxpayers of America, and they damn well better understand it.

March 02 2011 at 6:50 PM Report abuse rate up rate down Reply
1 reply to Bill's comment
randrand

Well put, my friend! LABOR HAS BUILT THE STRUCTURE OF AMERICA MIGHTY-BUT THEY TURN AND DO NOT ACKNOWLEDGE THOSE SACRIFICES WITH DUE MODICUM OF RESPECT AND DILIGENT CARE THAT MUST BE RENDERED IF THE RELATIONSHIP IS TO BE MAINTAINED. IN RECENT YEARS, THERE HAS BEEN A GLARING "DE FACTO" abrogation of faith on the side of corporations and their managements-often to the point of being arrogant and confrontational/

April 22 2011 at 10:29 PM Report abuse rate up rate down Reply
Kooka

Isn't more like 15% ?

March 02 2011 at 6:19 PM Report abuse rate up rate down Reply

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