Recently, the story is the same every day. The evening news casts its daily story on the growing unemployment rate. The only thing that changes from day to day is the number of unemployed workers and large firms cutting jobs. Companies are reducing positions by laying off workers. Some businesses are completely closing their doors. The unemployment rate refers to the percentage of the labor force that is unemployed. More specifically, it refers to those persons available for work who have actively searched for a job in the previous four weeks and are available for work. It is measured by the formula: Unemployment rate=(Unemployed workers)/(Total labor force)
The Bureau of Labor Statistics is interested in collecting, analyzing, and distributing this information. The data comes from current population surveys conducted monthly by the Bureau of Census. The data consists of the population and the percent of that population that is in the labor force and employed or unemployed, and those not in the labor force. Historical monthly and quarterly data on the unemployment rate is available at http://data.bls.gov going back to 1948, though this paper discusses the data for July 2006 through March 2009. The unemployment rate is important to us because it is one of the ways in which we measure economic health and gauge the economy’s growth rate. The effects of unemployment do spill over into other areas of the economy. When people are jobless, they have less disposable income causing a lower demand for nonessential goods and services. With lower spending by consumers, firms may be forced to look at ways to cut costs in order to stay afloat. One way to reduce expenses is to lay off more workers, resulting in a seemingly endless cycle as even fewer families are able to spend money to rejuvenate the companies’ business levels.
Quarterly Average Unemployment Rates and Changes
July 2006 through March 2009