Almost every month, the Bureau of Labor Statistics (BLS), part of the Department of Labor, announces total employment and unemployment figures for the previous month. These figures, particularly the headline unemployment rate, are widely regarded as among the most important economic indicators.
Unemployment data are produced through a monthly survey that the Census Bureau conducts on behalf of BLS. Each month, 60,000 households are contacted and asked about their job-related activities. The survey is known as the Current Population Survey (CPS) and has been conducted since 1940. The headline unemployment rate is the percentage of the civilian labor force (those aged 16 and over who are either working or looking for work) that is unemployed. It excludes discouraged workers, as well as those who have dropped out of the workforce for structural reasons such as retirement or school enrollment.
To produce the unemployment numbers, each household is contacted and asked questions such as the following:
For employed people, occupations are determined by the jobs they usually hold and industries by the industry in which their last job was categorized. For the unemployed, information is collected on their reason for being out of a job (whether they lost it or quit), how long they have been without a job, and their method of job search.
The official unemployment metrics (U-1 through U-6) include more and more groups of people in a continuing effort to gauge the full extent of the underutilization in the labor market. The “headline” number, U-3, is the most widely cited unemployment metric. However, it is not without criticism, particularly for its exclusion of discouraged workers.
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