If The Economy Added 290,000 New Jobs, Why Did The Unemployment Rate Go Up?

You might have noticed a few headlines this morning about the good jobs news — 290,000 new jobs were added in March — coupled with the rather grim realization that the unemployment rate climbed to 9.9%. What’s up with that?

The apparent discrepancy comes from the way the unemployment rate is calculated. The Bureau of Labor Statistics counts only active job seekers — and the government says that 195,000 of the new jobs were filled by people who had simply given up looking for jobs during the recession.

So, the good news is that people who had given up are getting jobs, and the bad news is that a lot of people have given up.

Here’s how the BLS defines “unemployed”:

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:

* Contacting:
o An employer directly or having a job interview
o A public or private employment agency
o Friends or relatives
o A school or university employment center
* Sending out resumes or filling out applications
* Placing or answering advertisements
* Checking union or professional registers
* Some other means of active job search

Passive methods of job search do not have the potential to result in a job offer and therefore do not qualify as active job search methods. Examples of passive methods include attending a job training program or course, or merely reading about job openings that are posted in newspapers or on the Internet.

How the Government Measures Unemployment [BLS]
U.S. Adds 290,000 Jobs in April; Rate Rises to 9.9% [NYT]

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  1. YoorCriptonite says:

    How the hell did 67% of the new jobs go to people who “had given up?” This does not pass the smell test.

    • Commenter24 says:

      Maybe a delay in application –> interview –> hiring? I suppose if the person gave up after applying, was taken out of the “numbers,” then got an interview and was subsequently hired, that could explain it.

      • domcolosi says:

        You got it. If I applied for ten jobs 6 weeks ago, but haven’t made any effort since then, I’m not counted as unemployed, but I could certainly still be hired by one of those ten places.

        • Jevia says:

          How do you know you are not counted as unemployed? Does someone call you up and ask? Do you go on the internet and fill out some survey? I’m really curious.

          How does the government know who is “too discouraged” to look for a job? What kind of time frame are we looking at. Is someone “unemployed” because they sent out resumes on Monday, but then “not unemployed” because they didn’t send out resumes on Tuesday?

          When I was unemployed for a stretch in 2007, I know that to get my unemployment compensation, I had to check the box every two weeks that said I was “actively looking for a job.” But even if I took a break for a week, I probably still would have said I was “active” to get my check. Are there people who really admit that for a period of time while their unemployed and likely need the compensation, that their “too discouraged” and “not actively looking” for work?

          • SenorBob says:

            Not everyone collects or is even eligible for unemployment. We moved for my husband’s job, and I haven’t been able to find a new job in the new city. Since I left my old job voluntarily, I don’t get unemployment.

          • AnonymousCoward says:

            I did a school report on this once…..They do a survey every week. Statistically significant, random sampling, blah, blah, blah. They ask a bunch of people if they’re working or not. If they’re not working, then they ask if they’ve looked in the last couple of weeks, etc. Then the number crunchers take that and calculate the results for the whole population. That’s where the unemployment figures come from.

            It’s not accurate like the census is accurate (assuming the census is accurate), but it’s certainly close enough to spot trends.

    • solkanar512 says:

      Companies tend to hold onto resumes for a year or so. This seems perfectly reasonable to me.

      • YoorCriptonite says:

        Just seems to me that those who don’t have the drive to continue job hunting would probably not be the top candidates for hiring, yet these quitters took a large majority of the new jobs? Inflated numbers seem inflated imo.

        • Sajanas says:

          Or people who took time off from job hunting to fix up the house, be with their kids, and what not. Once word gets out that the economy is doing better and people are hiring, these people who might have found a job earlier if they’d continued looking constantly, come back, and might be more qualified than those who have carried on unsuccessfully.

      • redhouse387 says:

        What? Companies that I gave my resume to 2 years ago might still call me? They will completely ignore the huge stack of current resumes to call me from my outdated resume?

    • bonzombiekitty says:

      I’ve heard it explained that previously discouraged job seekers are feeling better about their chances of finding a job, so they began searching again. That increases the size of the workforce, and that increase outweighs the amount of new jobs.

    • gStein_*|bringing starpipe back|* says:

      i think it might be twofold – a combination of people previously not looking for jobs who are once again searching (and are therefore once again “unemployed”), and people being hired who had previously applied for jobs, then stopped searching (and were therefore not “unemployed” at the time of their hire)

  2. donopolis says:

    That’s because all the jobs created were once filled by illegal immigrants and no-one else wants to be paid $12.00 a day.

    • Megalomania says:

      If we changed the immigration laws to make it easier to become a citizen, then perhaps it would be easier to force the companies breaking labor laws to start at least paying minimum wage and to collect taxes from them.

      • Loias supports harsher punishments against corporations says:

        Or, we could drive out all people breaking the law by being in the country illegally. That would open up A LOT of jobs!

        • Toffeemama is looking for a few good Otters says:

          Why can’t we do both?

          • Loias supports harsher punishments against corporations says:

            By eliminating illegal immigrants, it becomes a lot easier to grant more legal immigrant statuses.

          • Bob says:

            Sounds good to me, but the Republicans will scream “No Amnesty NOW and No Amnesty FOREVER!!!!” It is not right to legal immigrants but if we had a way for the best of the illegals to become citizens then we would have more tax revenue, salaries will stop falling and more technological innovation will happen because employers will need to increase the productivity of their remaining workers by many fold. Unfortunately there are a lot of vested interest in have slave….er….illegal labor.

        • Daemon Xar says:

          I think you overestimate the appeal of the majority of jobs held by illegal immigrants . . . do you want to work as a day laborer or pick fruit? Do any of your friends?

          • Illusio26 says:

            If it came between loosing my house and not feeding my family and working as a day laborer, I’d take that job in a second.

      • PupJet says:

        As much as I hate to say this, but I VERY much agree. A lot of the jobs are either outsourced to India or taken by illegal immigrants. Seriously, if you can’t be in this country LEGALLY then get out. As for those outsourcing the jobs, I hope you get taxed to high hell so that way you are FORCED to come back here and hire people you grimey bastards.

  3. pecan 3.14159265 says:

    Are they factoring Census jobs into this as well?

    • bonzombiekitty says:

      According to the NYT article, about 60,000 of the jobs reported are census jobs

      • bonzombiekitty says:

        oops, I mean 66,000

        • jayphat says:

          If that’s true, that’s a crap number then. You can’t claim real job growth when over 20% of the new jobs are only going to last 6 months, and are being paid for by the government.

          • Tightlines says:

            In other words, you can’t claim job growth when 80% of the jobs are private sector? That doesn’t make sense.

          • evnmorlo says:

            The government is a large employer. If it adds jobs it’s not wrong to include them. Of course that statistic like the government’s index of inflation based on Chinese imports do become mostly meaningless.

      • eligiblebachelor says:

        Yea but the Census guy just sent a letter to his “600,000 new colleagues”…..makes you wonder.

        http://blogs.census.gov/2010census/2010/05/a-note-to-my-600000-new-colleagues.html

        Fun fact, unemployed workers from the government collected Double, yes 2 times regular unemployment if they work for the government for about 1 year. Which many Census workers will by the time they get laid off.

    • leprechaunshawn says:

      I hope not. It doesn’t seem fair to count temporary jobs that are “created” every 10 years regardless of the economy.

      • YoorCriptonite says:

        This explains a good portion of it. These government positions can take applications for well over a year before hiring. 23% of these new jobs were temp – census jobs.

    • solkanar512 says:

      Yes, but most of the Census jobs were in March.

  4. milrtime83 says:

    This is why underemployment (around $17%) is a better indicator. I’m guessing the government uses unemployment because it makes the problem seem like it isn’t as bad as it really is.

    • Blackadar says:

      The government has been doing this with major indexes and statistics for over two decades now. Things like unemployment and inflation are purposely manipulated to make the stats look better. If people took the time to realize the true statistics, they’d realize how bad things have been over the last decade and their reaction would make the teabagger movement look like a hippie party.

    • littleAK says:

      I would think it would be rather complex to collect accurate underemployment data. Some people graduate with a particular degree, but choose a job in another field. This might look like underemployment, because they possess a skill set that is not being used, but these people should be distinguished from those that truly can’t find a job in their field. Some people want to work part time, others wish to work full time but cannot find full time employment. These people would need to be properly categorized, as well.

      The only thing that seems a little shady to me is counting seasonal and temp jobs as employment. These aren’t long term solutions for most people. At best, counting these jobs makes the numbers fluctuate more as people gain and lose short term positions.

  5. LMacConn says:

    A couple of my friends fit these statistics, they were unemployed long enough that their benefits ran out, but were recently re-hired by their former employer.

  6. Bob Lu says:

    Does it suggest that the number of people who have given up is twice the number of active job seeking people?

    Does it further suggest that the true unemployment rate is nearly 30%??!!

    Or is there a reason for those who’ve given up actually have better chance to get a job again?

    • Bob Lu says:

      Btw, I understand that in some states the 30% unemployment rate may not be too far from the truth. However it is hard to imagine that the whole US has a 30% unemployment rate. It sounds really bad, I guess?

    • bhr says:

      Some folks who have “given up” were actually laid off and rehired by the same place. Say I have a job I like, and am laid off but promised to be rehired when the company rebounds, I am unlikely to actively apply to jobs, unless something perfect appears.

      Another example could be someone like my father,who, when laid off by a company that went into bankruptcy officially “retired” and began collecting SS. He was not counted as unemployed, but after six months got bored and wound up taking a job that a former employee had called him about.

  7. two_handed_economist says:

    The number of nonfarm jobs increased by 290K in April, not March.

    http://www.bls.gov/news.release/empsit.nr0.htm

    • Tightlines says:

      True, but the good news is, the March numbers were revised upwards, from 162,000 to 231,000.

  8. eligiblebachelor says:

    This is total B S! If the U-6 number actually went up to 17.1% which is the number that includes “people not seeking work” then their are only two logical explanations for this situation:

    1. The numbers are completely wrong

    Or

    2. People not included in the government statistic for being unemployed (i.e, college students who just graduated, or even high school students who just graduated) have found full time employment. Meanwhile the people laid off for being dead weight, continue to be dead weight.

    This is probably what just happened, so good news college grads, sorry unemployed guys….

    • solkanar512 says:

      You need to understand that the two numbers are generated by different groups with slightly different methodologies. The majority of the time they match up well, other times they do not. Furthermore, this is preliminary data.

  9. Bob says:

    I think a lot of these people let go in 2008-9 are just coming back into the job search after retraining. I don’t expect this to be sustainable.

    A worrisome problem is that the American work force (supply) cannot match the manic-depressive demand for labor, which has gotten worse this decade. During good time businesses are starved for labor (hence the call for more foreign labor) and during recessions they have a surplus (shedding the expensive labor, many of which are Americans). Our economy needs to be on Lithium to help keep Americans employed. It’s not a cure all but it would be the first baby step to something better.

    The biggest worry is that the American work force has been shrinking for a long time now. Who will pay the next big push of retirees that will be applying for Social Security soon?

  10. Duke_Newcombe-Making children and adults as fat as pigs says:

    It’s because of the SOCIALISM!!!1111ELEVENZ!!!

  11. stegosaurus1 says:

    Re: the numbers..

    More people employed–self-explanatory.

    More people unemployed–people that weren’t actively looking for work before
    (i.e. disheartened, gave up,.. and therefore considered as NOT unemployed)
    have started looking for work again, in a better economy, and will now be
    considered as, once again, unemployed.