The Number of Unemployed
Each month, the Census Bureau, in cooperation with the Bureau of Labor Statistics surveys over 60,000 households in the United States; 2,000 of them in Michigan. During this scientific survey called the Current Population Survey, or CPS participants are asked a series of questions. Based on the responses to these questions, professional surveyors determine whether individuals are counted as Employed, Unemployed, or Not in the labor force.
To be considered unemployed in the Current Population Survey, an individual must have done no work for pay or profit during the survey week. In addition, they must have taken specific steps to find work during the last four weeks this is commonly referred to as actively seeking employment. Lastly, to be considered unemployed, an individual must be willing, able, and available to accept a job if one were offered to them.
The labor force, which is the sum of all employed and unemployed individuals, can be used as the dividend in simple division to calculate the unemployment rate. In this calculation, the number of unemployed as determined by the Current Population Survey would be the divisor and the quotient would be the unemployment rate. For example, consider an economy with a labor force of 100,000, 5,500 unemployed individuals, and 94,500 employed. After the calculation, the unemployment rate in this economy would measure 5.5 percent. This calculation is summarized below:
Box 1: Calculating the Official Unemployment Rate
----------------------- X 100 = Unemployment Rate
Unemployed + Employed
-------- X 100 = 5.5%
The unemployment rate which is mathematically the ratio of unemployed individuals to the number of persons in the labor force is one of the most commonly requested statistics and is a reliable measure of labor market activity and overall economic health.
In Michigan, each month the Department of Labor and Economic Growths Bureau of Labor Market Information and Strategic Initiatives publishes the official estimates of labor force, employment, unemployment and the unemployment rate for Michigan. This data is generated using a regression model developed by the U.S. Department of Labor, and is used in all states. The primary input into the model is the labor force estimates received from the Current Population Survey. Therefore, the Michigan unemployment rate that we read in the newspaper, see on television, or hear on the radio, primarily originates from the Current Population Survey.