1. Employment Situation Report
- Labor force and unemployment statistics -
Presented by: Alin Sturek
BUS 531- Managerial Economics March 12, 2013

2. Agenda
• Unemployment Rate Trend
• Report Source and Definition
• Methodology
• Definition of “Unemployed”
• Labor Force Trend
• Employment Changes Trend
• Employment Data Reporting
• Employment-Population Ratio and Historical Data
• Summary
The unemployment rate is a key indicator of economic prosperity. Analysis of employment data
can be useful in understanding current economic trends, anticipating changes in the macro-
economy and gauging impact on business conditions.

3. Unemployment Rate Historical Trend
(1948 – 2013)
10.8
10.0
7.8
Whether the unemployment rate rises or drops is a function of two factors:
How many jobs are created or lost
How fast the labor force is rising or contracting
Source: Bureau of Labor Statistics http://data.bls.gov/timeseries/LNS14000000

4. Report Source and Definition
Employment Situation Report
• Released by the Bureau of Labor
Statistics, division of the U.S. Dept. of Labor
• Updated monthly, released the first Friday of
every month
• Also known as the Labor Report, it is made up of
two separate and equally important surveys

5. Methodology - Part 1
Establishment Survey (CES)
• Sampling of approximately 145,000 businesses
and agencies across the country, covering about
one-third of all non-farm workers
• Includes non-farm payrolls, hours worked and
hourly earnings
– Average earnings, overtime, weekly hours
• Considered a coincident indicator – indicative of
current level of economic activity

6. Methodology - Part 2
Household Survey (CPS)
• Sampling of more than 60,000 households
produces a figure representing the total number
of individuals out of work (unemployment rate)
• Compiled by the U.S. Census Bureau with
assistance from the Bureau of Labor Statistics
– Census-like component, bringing demographic
shifts into the mix
• Considered a lagging indicator – indicative of
post economic activity

7. Who is Unemployed?
• Persons are classified as unemployed if:
– They do not have a job
– Actively looked for work in the prior 4 weeks
– Currently available for work
• Calculated as a percentage by dividing the
number of unemployed individuals by all
individuals currently in the labor force
• GALLUP also independently provides gauge on
the labor market on an ongoing basis: 8.0% in
February

8. Labor Force Historical Trend
(2007 – 2012)
Year Population Labor % of Total Employed % of Total Unemployed % of Total
Force
2007 231,867 153,124 66.0% 146,047 63.0% 7,078 4.6%
2008 233,788 154,287 66.0% 145,362 62.2% 8,924 5.8%
2009 235,801 154,142 65.4% 139,877 59.3% 14,265 9.3%
2010 237,830 153,889 64.7% 139,064 58.5% 14,825 9.6%
2011 239,618 153,617 64.1% 139,869 58.4% 13,747 8.9%
2012 243,284 154,975 63.7% 142,469 58.6% 12,506 8.1%
2012
vs. +11,.417 +1,851 16.2% -3,578 N/A +5,428 N/A
2007
*In thousands
- Civilian Non-institutional Population: People 16 years of age and older residing in the 50
States and D.C. who are not inmates and who are not on active duty in the Armed Forces.
- Of the 11.4 million increase in the population since 2007, only 16.2% entered the labor force.
Source: Bureau of Labor Statistics http://www.bls.gov/cps/cpsaat01.htm

9. Employment Changes Historical Trend
(2007 – 2013)
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
2007 234 90 186 76 141 80 (35) (24) 77 86 111 93 1,115
2008 14 (85) (79) (215) (186) (169) (216) (270) (459) (472) (775) (705) (3,617)
2009 (794) (695) (830) (704) (352) (472) (351) (210) (233) (170) (21) (220) (5,052)
2010 (13) (40) 154 229 521 (130) (86) (37) (43) 228 144 95 1,022
2011 69 196 205 304 115 209 78 132 225 166 174 230 2,103
2012 311 271 205 112 125 87 153 165 138 160 247 219 2,193
2013 119 236 355
*In thousands
Source: Bureau of Labor Statistics http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth

10. Employment Data Reporting
February 2013 Report (Released March 8, 2013)
• Highlights changes from previous month, as well
as year-over-year
• Non-farm payroll employment rises +236,000;
unemployment rate edges down to 7.7%
• Household survey found that 444,000 new jobs
were part-time jobs!

11. Employment to Population Ratio
• Measures the proportion of the country’s working-
age population that is employed; includes those
that have stopped looking for work
• The ratio is used in conjunction with the
unemployment rate to evaluate the labor market
• A high ratio means that a good proportion of the
working age population is employed, and typically
this positively impacts GDP per capita
– February 2013 ratio is 58.6

12. Employment to Population Ratio
Historical Trend (1948 – 2013)
64.6
58.2
Source: Bureau of Labor Statistics http://data.bls.gov/timeseries/LNS12300000

13. Items to Consider
• Seasonal employment can skew results;
seasonal adjustments are implemented, but
these may overcompensate and distort results
• Only measures whether people are working; it
does not measure the quality of the jobs or if they
are well-suited to workers' skills
• Revisions can be quite large
• Two different surveys - divergence between
payroll data and self-reported data
• One of the most widely watched reports, the
Employment Situation Report gets heavy press
coverage and impacts the financial markets

14. Sources
• http://www.bls.gov/cps
• http://www.bls.gov/ces
• http://www.bls.gov/news.release/empsit.nr0.htm
• www.gallup.com
• http://globaleconomicanalysis.blogspot.com/