OLMIS

by Gail Krumenauer
Published Mar-29-2012

Estimate of Unemployed is Based on Survey Reasons for Unemployment Unemployment Myths and Realities

The labor force consists of all residents 16 and older who are employed or who are unemployed and actively seeking work. The numbers of employed and unemployed people are determined primarily by responses to the Current Population Survey, a monthly survey of about 60,000 households nationwide, including almost 1,000 in Oregon. To avoid double-counting those who hold more than one job, each person in a sampled household is counted only once in the monthly labor force statistics. Those that are neither classified as employed or unemployed are excluded from being counted in the labor force. Examples include those with disabilities who are unable to work, retirees, children, students, and discouraged workers that have not searched for a job in the past four weeks. Institutionalized individuals are excluded from official labor force statistics, and the most commonly used labor force statistics also exclude active-duty Armed Forces personnel, which is why the term "civilian" labor force is often used.

Labor force data, which are further defined below, are also used to calculate the labor force participation rate. This statistic measures the share of eligible individuals who are active members of the labor force, expressed as the ratio between the labor force and the total eligible population. The Bureau of Labor Statistics estimates Oregon's labor force participation rate at 65.4 percent in 2011, which is 1.3 percentage points above the U.S. rate.

Employed: A labor force participant is counted as employed during the month if, during the week specified in the survey, he or she:

• worked at least one hour as a paid employee; or
  
• worked in his or her own business, profession, or farm; or
  
• worked at least 15 hours as an unpaid worker in an enterprise operated by a family member; or
  
• was temporarily absent from work because of vacation, illness, bad weather, childcare problems, parental leave, labor-management dispute, job training or other family or personal reasons.

Unemployed: A labor force participant is counted as unemployed during the month if, during the week specified in the survey, he or she:

• had no job, was available for work, and made specific efforts to find work, or
  
• was waiting to be recalled to a job after a layoff, regardless of whether or not he or she was looking for other work.

Unemployment Rate: The unemployment rate is simply the number of unemployed people expressed as a percentage of the labor force.

The definition of unemployment excludes certain groups which are sometimes thought to be unemployed or underemployed. Discouraged workers - those who would like to work but have stopped looking - do not count as unemployed because they are not actively seeking work. People who work part-time but would prefer full-time work also do not count as unemployed because they are working. While neither of these groups is included in unemployment figures, data for each are gathered and published separately by the Bureau of Labor Statistics in measures of "labor underutilization." These measures are available monthly for the nation as a whole, and as annual averages or the most recent four-quarter period for individual states. In 2010, the broadest measure of labor underutilization that includes discouraged and part-time workers, was 20.0 percent. For the most recent four quarters - the fourth quarter of 2010 through the third quarter of 2011 - the measure was 17.9 percent.

There are five major categories of the unemployed, based on a reason for unemployment:

• Job losers, who are on temporary or permanent layoff
  

• Job leavers, who voluntarily left a job and immediately began to look for another
  
• Those who completed temporary jobs and began to look for new jobs
  
• Re-entrants, those who worked, left the labor force, and have begun a new job search
  
• New entrants, those who have never worked before and are now seeking employment

Job losers made up the largest share of Oregon's unemployed in 2010, accounting for 61 percent of the total (Graph 1). The majority of the job losers lost their jobs permanently. The share of the unemployed who are job leavers typically varies with the state of the economy. During recessions, fewer people voluntarily leave their jobs since fewer opportunities exist elsewhere. When the economy and labor demand are strong, more people are likely to quit their jobs because they are confident something better will come along.

New entrants to the labor force have remained a relatively small and fairly constant fraction of the total unemployed (4% to 8%), primarily reflecting the size of the youth population. Unemployment among re-entrants to the labor force, however, is larger and more variable, following a pattern similar to that of job leavers. In general, the number of re-entrants tends to fall when employment declines and rise when job growth resumes.

To help distinguish the causes of rising or falling unemployment rates, economists often characterize unemployment as:

• Seasonal unemployment, which results from normal, repetitive fluctuations in business activity that occur as the seasons change, for example, post-holiday layoffs in the retail trade sector
  
  

• Cyclical unemployment, which results from a general downturn in business activity that is brought about by reduced demand for goods and services, such as during a recession
  
  

• Structural unemployment, which refers to a mismatch between industry needs and the skills of the local workforce, typically caused by a change in the economic structure of an area or by technological change
  
  

• Frictional unemployment, which occurs due to inevitable delays between starting a job search and finding a suitable job

A person does not have to be drawing unemployment insurance benefits to be counted as unemployed for statistical purposes. In fact, in the early part of 2011, the number of people receiving unemployment insurance payments totaled about three-fourths the number of people counted as unemployed. Unemployment insurance benefits vary by individual case; to obtain employment insurance benefits, an individual must first meet specific qualifying criteria. Thus, many who leave jobs will not be eligible even though they are out of work and are counted as unemployed.

Additionally, there are some cases where people are employed but qualify to receive unemployment insurance benefits. For example, a person who worked full-time but has been involuntarily cut to part-time hours may qualify for partial unemployment insurance benefits. Another example would be a person who has been laid off by one employer but works odd jobs for another employer or is self-employed. If the earnings from these odd jobs are small, partial unemployment benefits may be paid. However, since the individual works at least one hour per week, he or she is counted as employed rather than unemployed. As noted above, eligibility for unemployment insurance benefits is determined on a case-by-case basis.