I ran across this 'explanation' of how the BLS actually compiles unemployment statistics ...
"(snip)One would think an accurate count of unemployed could come from 350,000-plus workers per week who file new jobless claims, but that is not how the government counts the tiny fraction of workers who lose their jobs.
If you got to John's grocery story on Main Street and count his red apples for sale, and assume he alone represents quantity and price of apples across all grocery stores in the state...that is the method used by The Bureau of Labor Statistics at present.
Have you been called by the Bureau for its monthly survey? Statistically speaking we should all receive a call from them at some point. Don't hold your breath. But aside from the survey, there are ways to make the unemployed picture look better than it actually is given the pool of unemployed logged by BLS computer systems, and collected through benefit notification and IRS data records. The numbers could be skewed in favor of the White House just as in the example ahead.
Simple formula to understand unemployment rate calculation:
Let us use simple terms -- for this example 10 weeks of employment benefits -- statistically it does not matter how many weeks benefits are given. We've used the same data from the Bureau of Labor Statistics (BLS) to re-introduce professionals into the workforce; with equally shorter time to compensate for lost benefits.
With a group of 100 professional men and women (non-farm labor,) working for a variety of different corporations, at the first of month No. 1, 4 percent of these professionals are cut. With 96 people employed, 4 people are on unemployment benefits for the next 10 weeks. And our unemployment rate is 4 percent.
At the first of month No.2, two more people are laid off... six people are on unemployment benefits for the next 10 weeks, and six weeks respectively. While 94 people are employed the unemployment rate has risen to 6 percent.
Month No.3, four of our original 100 lose their benefits, so, 96 people are counted in the pool. Three people are laid off and our total of unemployed professionals stands at five, but the unemployment rate has dropped from month No.2, to 5 percent without anyone having found a new job.
Month No.4; great news two people have found jobs (one from month No.2,) two people are laid off, but we have a second readjustment to the number of employed, because only the two hired now count. With 95 people in the pool, our unemployment rate holds steady at 5 percent.
Month No.5; more great news two people found jobs! One person fell off the benefits, three people are laid off and now, we only have 94 people to measure. The unemployment rate holds steady at 5 percent.
Month No. 6, no new jobs this month with our 94 people. Two people were laid off. We loose two people on benefits. We have five people on benefits in total, and now with only 92 people to measure, our unemployment rates holds at 5 percent.
Month No. 7; excellent news two people were hired this month! Three were laid off. Four people live on benefits and one person fell off. And our unemployment rate has fallen to 4 percent while the number of people on benefits is at the lowest in six months.
With a 4 percent unemployment rate, anyone could claim this is super news. Except an important factor misses the equation. Our total of employed professionals from the original 100 has dropped to 88. Four live on benefits and from the original 100 people, the actual unemployment rate is 12 percent.... or three times greater than month No.7 shows.
While this example must not be taken to mean the BLS statistics should be multiplied by three, this model simply uses numbers to understand how the rate may appear positive, when in fact it does not provide an accurate picture of trends.
According to the Los Angeles Times, the true number of unemployed in the United States tops 16 million at the end of 2003. The number of professionals in part-time or freelance work while waiting-out their job hunt is 4.9 million, and 1.5 million professionals seek jobs due to imminent layoffs, added too 9 million already unemployed -- the US-unemployment is the highest in 20 years. The actual percentage of "unemployed" in the United States is 9.7 percent, up .3 percent from 2002. "(snip)



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