July 21st, 2013
Since I’m on the road this will be a short piece. Every week the Bureau of Labor Statistics (BLS) releases their estimate of new unemployment claims based on a compilation of state filings for unemployment. Labor market analysts pay more attention to the 4 week moving average of this series because the weekly numbers can be volatile or affected by weather and holidays.
Each month the BLS releases their estimate of the number of unemployed and the percent of unemployment but this figure comes from a survey of households. People surveyed report that they are unemployed and BLS interviewers substantiate responses by asking additional questions. However, there really is no independent verification that someone who says they are unemployed is actually unemployed.
As the states update their tally of those unemployed who continue to claim benefits, the BLS reports the number as Continuing Unemployment Claims. While no number is entirely accurate, there is a greater degree of accuracy in this number of unemployed. It does not include those who have not filed for unemployment or those who have run out their benefit period and are no longer eligible for benefits.
I wanted to compare this fairly reliable number with another somewhat reliable number – the number of employed from the Establishment survey. This total is based on a survey of companies who report the number of employees on their payroll. While this total has some problems it has proven to be more reliable than the employed number from the Household Survey.
Below is the number of continuing unemployment claims. Four years after the official end of the recession in June 2009, continuing claims are still at levels seen in the earlier two recessions. This indicates the persistent underlying weakness in the labor market.
Comparing continuing claims to the total employed reveals some surprises.
This metric shows the severity of unemployment in the recession of the early 1980s; the percentage surpassed the peak in this past recession. We can see that current levels are high but not dangerously so. We have seen higher levels during periods of robust growth in the mid to late 1980s and in the recovery years in the mid 1990s. What we want to see is a continued decline in this percentage.