Unemployment Rate Calculation

The unemployment rate is calculated by dividing the number of unemployed by the civilian labor force.

Unemployment Rate = 13.550 million / 160.838 million = 8.42% 

Note that the reported headline jobs number today (+1.4 million) has nothing to do with anything. That is the establishment report number. 

The number of employed (+3.756 million) does play into the calculation, but indirectly, as the labor force denominator.

Labor Force vs Employment

Note that employment rose by 3.756 million but the Labor Force only rose by 968,000. The impact of this discrepancy actually boosts the unemployment rate, but only by a tiny amount.

It's the numerator that matters. The numerator should match continuing claims. It doesn't.

Continuing Claims

Continued State Unemployment Claims Sep 3 Report

The BLS reference week is the week that contains the 13th of the month. That is the week of August 9-15. 

Major Discrepancy 

  • Continued claims for the week ending August 15 was 14.492 million as per the BLS.
  • Yet, the BLS also says the number of unemployed for that week was 13.550 million.

Minimum Number

14.492 million is the extreme lower bound we should see for the number of unemployed. 

Why?

State claims only include those eligible for state unemployment insurance. 

Missing From Continued Claims Number

  1. Gig workers
  2. Self-employed
  3. Those who have not worked long enough to qualify for state benefit requirements
  4. Those who have maxed out the number of weeks the states allow

Primary PUA Claims

Primary PUA Claims in 2020 Sep 3 Report

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Pandemic Assistance

Primary PUA claims for the reference week were 13.57 million, an increase of 2.6 Million. 

PUA picks up all 4 categories missing from Continued Claims. But it also picks up some number of part-time workers.

But at least some of those 13.57 million did not work at all. 

For the sake of argument, assume a mere 3.0 million of these workers did not work at all.

Unemployment Calculation

Unemployment Rate = (14.942 Million + 3.0 Million) / 160.838 Labor Force = 11.16%

Other Discrepancies 

I discussed other discrepancies in my Jobs report earlier today.

Part-Time Jobs

Part-Time Reporting Silliness

  • The net of voluntary vs involuntary part-time work is -33,000.
  • Total part-time work rose by 991,000

Don't try to make sense of those numbers as they never add up. I list them as reported.

For details please see Jobs Report Much Better Than Expected, But Is It Believable?

Methodology Change

On top of this mess is a BLS methodology change that artificially lowered the number of initial and continued claims starting yesterday.

For discussion, please see Unemployment Claims Improve But It's a Manipulation Mirage.

I suppose it is possible for the claims revision to be correct, but that still does not account for all the gig etc. workers on Pandemic Assistance that are genuinely unemployed.

Conclusion - Garbage

My conclusion is today's unemployment rate numbers are total garbage.

Mish

Examining the Discrepancy Between Jobs and Employment

In the past year, the BLS says the number of jobs rose by 2.62 million. Employment rose by 1.429 million.

Discrepancy Between Jobs and Employment Persists: Expect More Negative Revisions

The BLS revised away 75,000 jobs in April and May. The discrepancy between jobs and employment is still massive.

Tomorrow's Jobs Report Will Look Far Better Than It Really Is

Most expect a horrendous jobs report tomorrow. But the April report will be far worse.

Another Wild Jobs Report: Payroll Employment Rose a Disappointing 20,000

The BLS gave us another wild jobs report. Unemployment fell to a new low for the cycle but the jobs gain was only 20K.

Jobs Report: Payroll Miss +164K, Nonfarm Wage Growth Anemic +0.1%

The BLS reports April jobs as +164K with the unemployment rate falling to 3.9%. Revisions were positive, wages anemic.