How does the government figure unemployment?

Like many big reports, the Labor Department's monthly jobs report is based on data that is extrapolated from a randomly selected sample of all U.S. households, a much smaller group than the total number it seeks to determine.

For the monthly jobs report, the Labor Department contacts 60,000 households to determine the unemployment picture for the entire workforce, which consists of about 154 million Americans.

This is how almost all big surveys are done. Statistically speaking, if you're trying to get data out of a large population -- like a national presidential poll -- once you survey about 1,000 randomly selected people, you can be 95 percent confident that the answers you get are within 3 percentage points of the actual number. If you count every person, it's not a survey; it's a census. (And that is very expensive and time-consuming.)

Each month, 15,000 of the sample's households are switched out, so the 1,500 U.S. Census workers who take the labor data aren't talking to the same people each month.

Interestingly, people who are interviewed for the monthly survey are never asked: Are you employed or unemployed? If that sounds silly, it's because the agency has criteria to classify various kinds of employment: full, part-time, unemployed but looking, unemployed but not looking and so forth.

Instead, the poll-takers ask, for example: Last week, were you on a layoff from a job? Last week, did you do any work for pay or profit?

Once the data are taken, they are weighted to take into account age, race, sex and so on, to make certain the sample numbers more closely represent the general population numbers. So, for instance, if a certain 60,000-household sample contains more residents of Hispanic origin than exist in the general population, the Hispanic sample numbers are weighted downward.

Given all this, how accurate are the unemployment reports?

"A sample is not a total count and the survey may not produce the same results that would be obtained from interviewing the entire population," reads the Labor Department's Web site. "But the chances are, 90 out of 100, that the monthly estimate of unemployment from the sample is within about 230,000 of the figure obtainable from a total census.

-How the Government Tallies That Grim Jobless Rate

Related;
Worse Than the Early ’80s;

Ian Shepherdson, an economist at High Frequency Economics, called it “a terrible report.” He added that “the only possible glimmer of light is that the maximum rate of fall of payrolls is hopefully not far off.”

As is typical during a recession, employers are cutting costs mostly by laying off workers and reducing the hours of their remaining workers, rather than cutting workers’ pay rates. The average hourly pay of rank-and-file workers — who make up four-fifths of the work force — rose 3.7 percent during 2008. But the average workweek dropped to 33.3 hours, from 33.8 hours a year earlier, forcing many families to take an effective pay cut.

The unemployment rate in December rose to 7.2 percent, from 6.8 percent, and is now at its highest level in 16 years. That rate also understates the weakness of the job market, because it doesn’t count people who have given up looking for work or those working part-time even though they want full-time work.

The number of part-time workers who said they couldn’t find full-time work rose sharply again last month. More than 8 million people now fall into that category, up from 4.6 million at the end of 2007.

An alternate measure of joblessness that includes many such people rose to 13.5 percent, its highest level on record. That alternate measure has been calculated only since the early 1990s, however.

Over 8 Million Part Time Workers

After Eight Months, Landing the Job;

After searching for the last eight months, I have finally determined the next step in my professional career: I will be accepting an associate position at a boutique investment bank that specializes in restructuring and distressed M&A advisory services. The ironic part about this is that I didn’t discover the position through my own efforts. Instead, it was presented to me by an executive recruiter who had been referred through a friend and former Bear colleague. It makes me laugh when I think about it. After all the months I spent searching for a job, it actually found me! It reinforces what I’ve always thought–staying in touch with former coworkers can turn out to be one of the best resources in your arsenal of job-seeking weapons.

What’s even more interesting than how I came across the position is how perfect of a match it is for what I am looking to do. The interview process consisted of four separate rounds and spanned a couple months from start to finish. As each round progressed, not only did the interviewers get a glimpse of who I was but I also got to know a little more about them. I was able to answer what I felt were the two most important questions: Is this the type of work I want to be doing and can I see myself working with this person day in and day out?

As Bad as It Gets