Understated Unemployment

Does the government understate the unemployment rate because they only report what percentage of people are collecting unemployment insurance?

Claim:   The government understates the unemployment rate because they report how many people are collecting unemployment insurance rather than how many people are out of work.

Status:   False.

Origins:   Although this belief is widespread and has at times been reported as factual in the mainstream media, the truth of the matter is that unemployment statistics are gathered

through a process of sampling a representative number of households; they are not arrived by counting the number of unemployment insurance claims made during a particular month. Data collected in the Current Population Survey (CPS), a monthly survey of over 60,000 households, is used for this purpose. From this data, an extrapolation is made about the unemployment status of the country as a whole.

Were this not so, jobless people whose benefits have run out would not be included in the number. Likewise, those who were never eligible for benefits or who never applied for pogey would be missed, rendering the statistic inaccurate.

While not related to the national unemployment rate, unemployment insurance claims data do serve as inputs into the calculation of state and local area unemployment estimates.

Barbara “git along, li’l pogey” Mikkelson

Additional information:

    How is the UI Rate Related to UI Claims?   How is the UI Rate Related to UI Claims?   (U.S. Dept. of Labor)

Last updated:   21 July 2007


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