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Decoding The Jobs Report

December 3, 2011

Job gains in the U.S. got a boost on Friday when the Bureau of Labor Statistics released the latest jobs data. Last month’s unemployment rate unexpectedly fell to its lowest level since March 2009 down to 8.6% from 9%. That translates to about 120K jobs added in November. This and the other indicators provided by the report highlights an economy possibly on the rise—if you know how to read it.

For many of us analysis came from newspapers around the country most of which provided commentary on the headline number. What’s the new rate? The other factor’s U-3, U-6, payrolls, etc. aren’t as heavily reported on, but are ultimately more important in understanding the environment.

Firstly remember there are many different ways to measure unemployment. 

Payrolls:

The establishment payroll survey report is based on a survey of approximately 140,000 businesses and government agencies. The statists they collect are monthly statements of employment, hours, earnings for both the U.S. as a whole, individual states, and major cities. It’ often thought to be more accurate than the overall jobs number.

U-3: Official Rate

Those who want or are able to work, but can’t find a job. Underemployment is not counted in this official number because workers are gaining some income, though often not enough to support them.

U-6: Underemployed Rate

Measures employees working part time when wanting to work full time. The current underemployment measure is 15.6% from 16.2%. If you work one hour a week at a minimum wage job you’re not unemployed (U-3) but you are underemployed (U-6)

For other looks at the jobs number and a bit more specific commentary please check out Time, Salon, and the Christian Science Monitor.

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