Cassidy: Who Gets Counted In The Unemployment Rate And Why

At the start of every year, the B.L.S. updates its population estimates to reflect new information from the Census Bureau. This year, relying on findings from the 2010 Census, the B.L.S. raised its estimate of the sixteen-and-over population by 1,510,000, to 242,269,000.

This is where things get tricky. If the B.L.S. had assumed that all these newly counted people were in the labor force and working, the labor force would have swelled by 1.51 million, to about 155.9 million, and the January unemployment rate would have been lower: 8.2 per cent instead of 8.3 per cent. Similarly, if the B.L.S. had assumed that all 1.51 million of these people were in the labor force but out of work, the unemployment rate would have been higher—quite a bit higher, actually: 9.2 per cent.

At the start of every year, the B.L.S. updates its population estimates to reflect new information from the Census Bureau. This year, relying on findings from the 2010 Census, the B.L.S. raised its estimate of the sixteen-and-over population by 1,510,000, to 242,269,000.

This is where things get tricky. If the B.L.S. had assumed that all these newly counted people were in the labor force and working, the labor force would have swelled by 1.51 million, to about 155.9 million, and the January unemployment rate would have been lower: 8.2 per cent instead of 8.3 per cent. Similarly, if the B.L.S. had assumed that all 1.51 million of these people were in the labor force but out of work, the unemployment rate would have been higher—quite a bit higher, actually: 9.2 per cent.

What the B.L.S. actually did assert was that, of these 1.51 million people, just 258,000 were in the labor force: 216,000 were working and 42,000 were unemployed. Why did the B.L.S. do this? And what about the other 1,252,000 people—were they simply expunged from the work force for political reasons? No, they weren’t. I have seen no evidence to suggest that the statisticians in the B.L.S., or in any other government department, are politically motivated. In my experience, they are highly trained public servants who value their independence.

The B.L.S. explained that it adjusted the figures “because the population increase was primarily among persons 55 and older and, to a lesser degree, persons 16 to 24 years of age. Both these age groups have a lower rate of labor force participation that the general population.” The reason for that is no mystery: many older people retire; many young people go to high school and to college.

Read more of John Cassidy's article at the New Yorker

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