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Unemployment

On January 3, 2022, our fictional Dateland Statistical Agency (DSA) announced that the civilian noninstitutional population of Dateland was 100 peoples in December 2021.

On the same day, DSA also stated that the unemployment rate was 4% in the last week of 2021 in Dateland.

 

The findings of the survey conducted by DSA for the month of December 2021 is given by Table 1 below.

Table 1 – DSA Population Survey Results – Last Week of 2021

  The Breakdown of Dateland Population
Civilian Noninstitutional Population (Aged 16 and Older) 100
Civilian Labor Force (Aged 16 and Older) 50
Not in Civilian Labor Force (Aged 16 and Older) 50
Employed (Aged 16 and Older) 48
Unemployed (Aged 16 and Older) 2

Following the convention set by U.S. Bureau of Labor Statistics (BLS)

Dateland Statistical Agency’s survey focuses on only civilian noninstitutional population aged 16 and older.

In other words, population of interest of the survey is civilian noninstitutional population aged 16 and older. This category of population excludes active-duty members of Dateland’s armed forces, people in correctional institutions and detention centers such as jails and prisons, and people in nursing homes.

Employed

Dateland Statistical Agency, like U.S. Bureau of Labor Statistics (BLS), classifies people aged 16 and older as employed if, during the survey reference week, they meet any one of the following criteria:

  • 01 worked at least 1 hour as a paid employee

  • 02 worked at least 1 hour as self-employed

  • 03 were temporarily absent from their job, business, or farm, whether or not they were paid for the time off

  • 04 worked without pay for a minimum of 15 hours in a business or farm owned by a member of their family

Unemployed

Dateland Statistical Agency, again by following the convention set by U.S. Bureau of Labor Statistics (BLS), classifies people aged 16 and older as unemployed if, during the survey reference week, they meet all the following criteria: 

  • 01 They were not employed during the survey reference week

  • 02 they were available for work during the survey reference week, except for temporary illness

  • 03 They made at least one specific, active effort to find a job during the 4-week period ending with the survey reference week or they were temporarily laid off and expecting to be recalled to their job”. From another perspective, an adult person who does not have a job and who does not look for a job is not classified as unemployed. 

Labor Force Unemployment Rate

At the very beginning of this section, we have said Dateland Statistical Agency (DSA) announced that the unemployment rate was 4% in the last week of 2021 in the country.

Now, step-by-step, we can show how DSA have reached this conclusion of 4% unemployment rate from the data made available by DSA in Table 1.

In Step 1, statisticians in DSA calculate the civilian labor force (from now on we will call it labor force) for Dateland by using the following formula:

Civilian labor force = labor force = number of employed + number of unemployed

Therefore, 

labor force of Dateland in the last week of 2021 = 48 employed + 2 unemployed = 50 Datelanders

Then, in Step 2, statisticians in DSA calculate the unemployment rate by using the following formula:

unemployment rate = number of unemployedlabor force × 100

Therefore, 

unemployment rate of Dateland in the last week of 2021 = 250 × 100 = 4%

Again, an adult person who does not have a job and who are not currently looking for a job is not in the labor force. U.S. Bureau of Labor Statistics (BLS) has a schematic diagram on “people not in the labor force” (Figure 1).

Not in Labor Force

In other words, responsible agencies estimate monthly inflation from monthly CPI numbers. Furthermore, agencies also publish annualized inflation figures based on the monthly inflation – a month’s CPI number compared to the CPI number of the same month in the previous year.

One of the crucial elements in Figure 1 is “discouraged 4 ” or discouraged workers category. When the surveyors ask these discouraged workers main reason that they stop looking for a job in the last four weeks most common answers were:

  • 01 There are no jobs available, or none for which they would qualify

  • 02 They have been unable to find work in the past

  • 03 They lack the education, training, or experience needed for available jobs

  • 04 Employers think that they are too young or too old, or they are subject to some other type of discrimination.

Hence, we should keep in mind that when DSA estimates the unemployment rate in Dateland as 4%, we should know that discouraged workers are excluded from the estimation.