March 24, 2021

Understanding the Monthly Jobs Report


KEY TAKEAWAYS

  • The U.S. Department of Labor’s monthly jobs report provides information on unemployment, job gains, earnings, labor force participation, and other characteristics of America’s workers.
  • DOL bases the report on two surveys: one of business and government agency payrolls, and one of households.

Each month, the Department of Labor releases an update on the country’s employment situation, or “jobs report.” The report draws on data from a survey of about 145,000 businesses and government agencies and a separate survey of around 60,000 households. Respondents answer questions about their payroll and work situation during the week or pay period that includes the 12th day of that month, which is known as the reference week or period.

What the Surveys Tell Us

What the Surveys Tell Us

Policymakers, researchers, and others use the jobs report to understand employment among different demographic groups, unemployment, job gains and losses in different industries, workers’ wages and hours, and other aspects of the labor market. Because the numbers can affect financial markets, the report is closely guarded prior to release. The release is typically the first Friday of each month.

One important measure in the jobs report is the official unemployment rate, which was 6.2% in February. It had been low prior to the economic shutdowns associated with the COVID-19 pandemic but rose as high as 14.8% in April 2020. The household survey counts people as unemployed if they did not have a job during the survey’s reference week and if they are available to work. They also must have interviewed, applied for a job, or otherwise actively looked for a job during the prior four weeks. People are also counted as unemployed if they are on temporary layoff and expect to be called back to their job. This would include, for example, someone temporarily laid off from an auto manufacturer while it retools a facility to make a different vehicle.

The labor force includes people with jobs and those actively seeking work. People only doing passive job search activities, such as reading a job posting, and those who have stopped looking are not part of the labor force. People out of the labor force also would include retirees, stay-at-home parents, and college students, if they do not have jobs and are not actively searching for jobs.

Who Counts as Unemployed?

Who Counts as Unemployed

The jobs report draws from the survey of businesses and government agencies to show the change in “nonfarm payroll employment,” or the net job gains or losses for the month. These figures are provided for selected industries, including manufacturing, health care, and construction. In 2019, net monthly job gains averaged 168,000. The economy abruptly lost more than 22 million jobs last spring, amid state and local stay-at-home orders and business closures caused by the pandemic. On net, the U.S. has regained more than half of the jobs lost.

Based on information collected in the household survey, DOL also reports the labor force participation rate, which shows the labor force as a share of the population. Specifically, it is the people working or looking for work as a percentage of the population age 16 and older, not living in institutions or facilities such as prisons, and not on active duty in the military. This is reported for different age groups and by other demographic characteristics. Economic conditions and changes in demographics, such as aging workers, can affect participation in the labor force. The rate stood at 61.4% as of February 2021, which is 1.9 percentage points below the level a year earlier.

The jobs report uses the survey of businesses to track changes in average hourly and weekly earnings for workers on private sector, nonfarm payrolls. It also includes earnings information for workers in production and non-supervisory roles and by industry.

The survey of businesses does not include farm workers, private household workers, or the self-employed, but the survey of households covers these workers. Jobs report numbers for employment levels, labor force participation, changes in payrolls, and other indicators are reported as being “seasonally adjusted.” This accounts for things such as weather, holidays, and the start and end of the school year, and it makes it easier to see changes that are not due to seasonal events.

revisisions and Errors in the Jobs reports

Statistics for employment, hours worked, and workers’ earnings from the survey of businesses are revised in the next two months’ jobs reports, based on additional survey responses received after the report has been published, as well as updated seasonal factors. The February report, for example, revised the combined job gains for December and January upward by 38,000 jobs.

Unusual events can cause misclassifications in the jobs report. The Labor Department says that this may happen in the household survey if people misunderstand the questions or if the interviewer records the responses incorrectly. In January 2019, during the partial government shutdown, federal workers absent from work during the reference week due to the shutdown should have been counted among the unemployed on temporary layoff. The department found that some were counted as employed but absent from work instead. If they all had been counted as unemployed, the unemployment rate would have been a bit higher. Starting with the March 2020 report, survey interviewers have been told to count people who said they were employed but not at work because of temporary, pandemic-related closures as unemployed on temporary layoff. This did not happen for every respondent, introducing some unknown amount of misclassification into the numbers. DOL has said it believes the share of possible misclassifications has gone down recently.

Issue Tag: Labor