Employment Rates on the Rise: Signs of Good Times to Come

Although many people are still struggling to find work, employment rates began to rise in late February 2012 and are continuing to rise as of April. Employment rates didn't rise equally throughout the entire United States; however, President Obama and his supporters pointed to the rising rates as a sign that the economy is beginning to recover from the long recession it has suffered. Before coming to this conclusion, however, it's important to understand the different statistics the Bureau of Labor Statistics uses to determine whether employment rates are rising.

Non-Farm Payroll vs. Household Rates

The Bureau of Labor Statistics uses two different surveys to determine the employment rate each January, according to What They Think.com. The first survey is the non-farm payroll rate. This refers to how many people are being employed outside their homes in a non-farming capacity. The BLS determines this rate by looking at how much Social Security tax businesses pay. However, some businesses submit Social Security tax payments less often than others, so this statistic is not necessarily accurate. Thus, the BLS must continually revise this statistic as new information comes in.

The other statistic comes from the household survey. This statistic is important because it takes self-employed people into account as well as people who are employed outside the home. Thus, the household survey statistic is a more accurate statistic of exactly how many people are employed in the United States at the time the survey was taken. When the BLS says that the unemployment rate dropped, it is usually relying on the household survey data. The unemployment rate in the United States dropped to 8.3 percent in January 2012, based on the results of this survey.

Interpreting the Data

The BLS usually releases the figures for both surveys together, so it's important to separate out and look at the statistics. The non-farm payroll rate informs people of the approximate number of outside-the-home jobs that have been filled in the past year, which can give somewhat of an indication of the economy's growth, but analysts should focus on the unemployment rate.

In addition, the unemployment rate differs from state to state. It's important to understand how your state's economy is doing as well as the general unemployment rate. For example, the Midweste
states had the smallest decrease in unemployment in 2012.

Comparison to Years Past

In addition to looking at how many people are employed in a given state, the Bureau of Labor Statistics compares the unemployment rate to the previous year's unemployment rate to see how things are improving. Some states may show an increase in unemployment even though their unemployment rates are better than they were a month ago. For example, New York's unemployment rate improved from February to March, but more people were unemployed in March 2012 in New York than were unemployed in March 2011.

Conclusion

The different unemployment figures show that employment rates are increasing slightly, which suggests the economy is beginning to improve. However, unemployment is still high, and self-employment may account for some of the decrease in unemployment.