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Thursday, September 15, 2011

Has the U.S. gained or lost jobs since Obama took office? An Explanation

Have we gained or lost jobs since Bush left office and Obama was inaugurated?  Keep reading...

For the latest unemployment/jobs numbers, please click HERE!!

The following links refer to September 2011 numbers.   For current information, please click the link above.

Current Updates with September jobs numbers:
This is the most common question asked of this blog, and one of the trickiest to answer.  It would be great to have one number, one simple number that answered that question.  But we don't.  If you want an answer to this question, check this link for the latest numbers: Has the US Gained or Lost Jobs Since Obama Took Office? -- but you may wish to continue reading for some background and explanation.

Here are the difficulties encountered in answering the question of whether or not we have gained or lost jobs since President Obama was inaugurated:

1.  First of all, we were losing jobs at an extreme rate when Obama was inaugurated.  In seasonally-adjusted (Explanation HERE) non-farm payroll numbers, over two and a half million jobs were lost in the five months before Obama took office.  Over five hundred thousand jobs a month were lost.  Nobody could possibly have expected that kind of job loss to immediately end,

As it was, it took about a year before we stopped shedding jobs and started adding jobs.  So, in asking whether or not we lost jobs under Obama, do we count the blood bath in jobs that continued for a year after Obama was elected?  During the Great Depression, unemployment reached its peak during the year after Roosevelt was elected; no matter what a President does, a very deep recession will take some time from which to recover, and unemployment recovers after the GDP recovers  

Therefore, I provide numbers both from January 2009, the time that Obama took office, and from the "trough" of the recession, which occurred in early 2010.

It is up to the reader to determine which set of numbers he/she wishes to use.

2.  To further complicate the matter, two different but complementary reports are released monthly in the same news release from the Bureau of Labor Statistics.  One is the Establishment or Non-Farm Payroll Report which gives us the Jobs gained or lost numbers; the other is the "Current Population (or Household) Survey" which gives us the monthly Unemployment Rate and provides the number of workers.:

A.  What is the Payroll report that is released and reported monthly?
  • The monthly "jobs" numbers that we hear about on the news are taken from the "Establishment Survey" in which a statistical sample of many employment "establishments" is used to determine whether or not non-agricultural employers have added or decreased jobs during the previous month.  A detailed explanation of the Establishment Survey is found HERE.  The report is sometimes called the "Non-Farm Payroll Report", the "Employment Report", or the "Employer's Report".  It's the same thing, but it is NOT the same thing as the "Current Population Report" or the "Unemployment Numbers Report".
  • The increase or decrease in monthly jobs that we hear about is the seasonally-adjusted number of jobs.  A non-adjusted number of jobs is also reported.  I describe that HERE and talk about the differences between the two numbers.
  • The Establishment Survey is also used to assess jobs loss or gain by industry group and by private or government employers.  Military personnel and employees of the CIA, NSA, National Imagery and Mapping Agency, and the Defense Intelligence Agency are excluded from the Establishment Survey.
  • Sole proprietors, the unincorporated self-employed, unpaid volunteer or family workers, farm workers, and domestic workers are also excluded.

B.  Does the unemployment rate come from the monthly jobs report?
  • No.  As mentioned above, the monthly Employment Situation Report which is released by the BLS consists of reports from two sources.  The second part of the Employment Situation Report is the Current Population Survey, the survey of people and workers, and that is the report from which the unemployment rate is calculated.
  • The Current Population Survey is based on a survey sample of 60,000 households in the United States. Statistical samples are used for almost every number out there, as it is not possible to count every person in the United States. We only attempt to count every person in the United States every ten years, in the decennial Census. 
  • The Current Population Survey, which is conducted monthly, is used to determine how many people are working, how many are looking for work, how many are working part-time, full-time, multiple jobs, etc.  From that data, the monthly unemployment rate is calculated.  Details about how the government counts people and what questions are asked of the sample can be found HERE.
  • The "official" monthly unemployment rate, called the U-3 rate, is determined by dividing the number of people looking for work by the number of people in the labor force.  The number of people in the labor force is the total of people working who are over 16 and the total of people actively looking for work (in the last four week) who are over 16.
  • I have written more about "How the Unemployment Rate is Calculcated" HERE.  
  • I also calculate a monthly alternate unemployment rate HERE.

3.  All numbers, both the jobs and the unemployment/employment numbers are presented both with seasonal adjustments and with "raw" data not adjusted for seasonal variation.  I explain the concept behind "seasonal variations" HERE.  

I present most of my numbers in both seasonally adjusted and "raw" unadjusted numbers.  In most cases, the seasonally adjusted numbers are more relevant.  

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