EXAMPLE 1 How Can a Survey Measure Unemployment?
The monthly unemployment rate comes from the government’s Current Population Survey (CPS; www.census.gov/cps/), which involves a sample of about 50,000 households each month. To measure unemployment, we must first specify the population that we want to describe:
- Which age groups will we include?
- Will we include illegal immigrants or people in prisons?
- Should we include military personnel?
The CPS defines its population as all U.S. residents (whether citizens or not), 16 years of age and over, who are civilians and not in an institution such as a prison. the civilian unemployment rate announced in the news refers to this specific population.
The second question is more difficult: What does the term unemployed mean? Someone who is not looking for work—for example, a full-time student—should not be called unemployed just because he or she is not working for pay. If you are chosen for the CPS sample, the interviewer first asks whether you are available to work and whether you actually looked for work in the past four weeks. if not, you are neither employed nor unemployed; you are not in the labor force.
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If you are in the labor force, the interviewer goes on to ask about employment. Any work for pay that you performed the week of the survey, whether for someone else or in your own business, qualifies you to be counted as employed. So does at least 15 hours of unpaid work in a family business. in addition, you are considered employed if you have a job but didn’t work for reasons such as being on vacation or on strike.
So, an unemployment rate of 6.7% means that 6.7% of the sample was unemployed, using the exact CPS definitions of both labor force and unemployed.
