Huh? A Lousy Jobs Number, Yet the Unemployment Rate FALLS?

...a 30-second explanation

Paul Brandus (Apr. 5, 2013)


How on earth could the March unemployment rate fall to 7.6% - when the economy created just 88,000 jobs? 

Here's why: the jobs and unemployment figures come from two different government surveys - which can show different things.  One surveys households (this is called the "household survey"), the other surveys employers (this is called the "payroll survey"). Here's how they work: 

The payroll survey asks companies and government agencies how many people they employed during the month. Result: number of jobs gained or lost. In March, the payroll survey was +88,000. 

The household survey asks individuals: do you have a job? If you say no, are you looking for one? If you're looking, then you're considered unemployed. If you're not looking, then you're not considered unemployed. The household survey is used for the unemployment rate - which fell to 7.6%. A lower rate sounds good, doesn't it? But it's also a reflection of just how many people have given up looking for work - and therefore are no longer counted. 

And that's why the payroll and household surveys can sometimes produce conflicting results. Both are important, and both need to be studied each month to get a reasonably accurate view of how things are going. It's clear from the March reports that things are not going well. 

-Paul Brandus at the White House

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