Many people have questions about how unemployment and the unemployment rate are calculated each month. Issues have arisen about the tie-in to unemployment benefits — whether self-employed workers and others are included. N.C. State University economist Mike Walden helps clear up the confusion.
“Well first of all …, there is no tie-in between the calculation of unemployment and people receiving unemployment benefits. There’s absolutely no tie-in there. The unemployment rate and the count on the number of people unemployed are done by separate survey, a separate sample of households, all households. It includes people who do receive unemployment benefits. It also includes people who are not receiving unemployment benefits, as well as people who are not even eligible for unemployment benefits. So, there is absolutely no-tie in there.
“So oftentimes you hear folks say, ‘Well, once someone goes off of unemployment benefits, even if they don’t have a job, they’re not counted as unemployed.’ That’s simply not true. Secondly on the point about self-employed people, there’s some who say, ‘Well, self-employed people, they’re not counted.’ They actually are counted. They are part of a sample. So if you have a self-employed person who doesn’t have work, who has lost their job or whose business has failed, they are going to be part of the statistical sample, and they are included in the unemployment count.
“And then lastly sometimes I hear people say, ‘Well, these rules about who’s included in the unemployed, and who’s not, there are new rules that are meant perhaps to make the unemployment look better or worse than it is, that’s also a mistake.’ These rules on how we measure unemployment have been around for decades — since the 1930s. So there’s been no change (in) how we do this. So, I think it’s important to know here that it’s a separate survey. It tries to include everyone, and it’s been a consistent survey for over 70 years.”
Category: Economic Perspective