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US Gains Jobs While Unemployment Rate Goes Up

Friday's unemployment report shows the number of jobs created in the U.S. economy improved, with a net gain of 171,000. At the same time the unemployment rate worsened slightly, rising to 7.9 percent.

Gary Steinberg of the Bureau of Labor Statistics says this contradiction appears once in a while because the job creation numbers and the information on the percentage of the workforce that is jobless come from different surveys that ask different questions of completely different groups of people.

The unemployment rate comes from a survey of 60,000 households. Researchers ask who has been paid to work or sought paid work recently. The unemployment rate is the percentage of unemployed people out of the total number of people available and willing to work.

Data on the number of jobs gained and lost comes from a separate survey of 400,000 worksites. These firms are asked how many people are on the payroll.

Cornell University Managerial Economics Professor Sharon Poczter says tracking employment is complicated by the constant flow of people in and out of the workforce. If people who had given up finding work, and are therefore not counted as unemployed, get jobs, then the unemployment rate goes down. But if these "discouraged" workers see signs of an improving economy, and begin searching for work, they are officially unemployed and the rate goes up.

She says there is a similar issue when people reach retirement age and leave the workforce. Employed people leaving the workforce would tend to push the jobless rate up, while unemployed people hitting retirement could make it go down.

Experts say there are some other places for quirks (odd things) to appear in the data. For example, if a person has a full-time job and a part-time job, the business survey would see two jobs, even though it concerns only one person.

Similarly, if a young entrepreneur like Steve Jobs is working in his parents' garage inventing Apple Computer, he might not show up in the business survey, but would appear in the household survey.

Poczter and other experts say the current system has to evolve to monitor changes in the ways and places people work. Counting employees in a steel mill is easier than discovering inventors coming up with the next company like Facebook.

Steinberg says his agency is constantly looking for better ways to find and communicate data.