You might be wondering how the unemployment rate could stay the same, 9.1% while zero actual payrolls jobs were added. When the unemployment report is released, it's actually a 2fer. There are two separate surveys or reports: the current establishment survey, which reports on nonfarm payrolls only, and the the household survey, which uses the Census population estimates as a base. The establishment survey has an error margin of 100,000 per month, while the household survey has an error margin of 400,000 per month. Additionally the establishment survey is jobs, as reported by employers. It is W-2 types of jobs and doesn't count agriculture workers to boot, whereas the household survey estimates the self-employed, farm workers, the glorified servants of the uber-rich and my favorite, unpaid family workers.
Additionally the survey timing is different. The establishment survey picks up the pay period which includes the 12th of that month. So, whether one is paid hourly, daily, weekly, bi-weekly, monthly, they just look at the pay period which includes the 12th. No pay on the 12th and you're paid daily, then that job doesn't count, including unpaid sick days. Working one hour a month and it magically falls on the 12th? By this survey, that's actually a job.
The Household survey, also called the current population survey also takes results for the week which includes the 12th day of each month. People are counted as employed in this survey, even when they are absent from their jobs for that entire week, paid or not paid.
For more details on the surveys, see this FAQ.
Ok, how did we get zero jobs when the Household survey said 331,000 more people were employed this month than last? It's because of the apples and oranges differences between the two surveys. There is error, the household survey counts self-employed, agricultural workers, those on unpaid leave, unpaid time off, those on strike and those working in the home unpaid. Additional the household survey is scaled by population estimates, which for this report, are based on the 2000 Census and also have a yearly adjustment.
Fortunately the BLS gives us yet another report, recent trends, to compare the two surveys.
First, they went ahead and removed the self-employed agriculture workers, unpaid leave and such to make the employed count more similar to nonfarm payrolls. This adjusted number says 134,000 more people were employed in August than July.
Next, they show the two surveys have always varied widely in terms of aggregate totals. Part of this is the household survey uses population estimates when it extrapolates out it's results from the survey to the entire country. Below is their graph of not only the two surveys since the methods were changed (1994), but also their adjusted version of the household survey, to make it cover closer what the establishment survey does.
With that, let's look over some of the Household survey statistics for August 2011.
Those entering not in the labor force decreased by -165,000. The above graph shows the dramatic increase since the start of this recession. This is where people who fall off of the employment statistics count go. The labor force participation rate ticked up 0.1% to 64%.
The civilian labor force increased 366,000 while the civilian non-institutional population increased by +200,000. What this means more people came out of the shadows to be counted as either employed or unemployed.
How can the unemployment rate stay the same when there were no damn jobs? The official unemployed increased by 36,000, alternatively the employed increased 331,000. The actual labor force jumped by 366,000, simply because on top of population growth, so many were added to the count. The employment to population ratio increased 0.1% to 58.2%. The employment rate is a ratio, the unemployed to the civilian labor force and why the rate remained the same. The unemployed increased, but so did the civilian labor force.
So, how could the household survey employed number, 331,000, jump so high in a month with no damn jobs? Agricultural workers increased 110,000 and self-employed increased 25,000. We also have the striking Verizon workers who reduced payrolls by 45,000, but are counted in the household survey. The BLS also estimates the number of unpaid family workers, but it is not seasonally adjusted. August's tally was 66,000. That's 241,000 jobs in areas the establishment survey doesn't count. The Verizon striking workers shouldn't have been counted as unemployed, but it's unclear what happened in this case. Regardless, as we can see, delving into the details, the discrepancies between the two surveys can be explained.
Odds on, these jobs from the household survey are not great jobs. The new trend is to claim people working 1099-misc are self-employed, all to undercut hourly wages, labor law and benefits. Employers force workers to be contractors, instead of hiring them as employees.
Below is an annualized, by averaging method, graph in the yearly civilian non-institutional population change. It's from this superset of people that potential workers come from. This is why one must create jobs greater than the constant rate of jobs lost. There are more people to employ. unemployment is a percentage, a ratio.
The BLS unemployment report counts foreign temporary guest workers as well as illegal immigrants in their U.S. labor force statistics and doesn't report statistics by immigration status, unfortunately.
The civilian non-institutional population are those 16 years or older not locked up somewhere or not in the military or so sick and disabled they are in a nursing home and so on. The rate continually increases. Compare that fact to the graph of the civilian labor force, or those actually counted in the employment statistics. While there appears to be high variance on a month to month basis, overall the size is decreasing. Think about it, the population is increasing and the labor force is decreasing. Not a good sign.
For the actual labor participation rate and employment ratios and graphs, see a big fat zero unemployment report article.
U-6, or the broader unemployment measurement, increased 0.1% to 16.2%. U-6 includes the official unemployed, people stuck in part-time jobs because either their employers cut their hours back or that's all they could get and what is called the marginally attached, or those not in the labor force officially tally but who looked for a job in the past year.
A graph of the alternative unemployment measurement, U-6, is posted below. Here you can see the incredible increase in comparison to the beginning of 2007.
You might also be interested in reading What's the real unemployment rate?, which calculates a series of measures and shows you the assumptions and calculations.