Economy A tale of 2 separate employment surveys

The unemployment rate fell sharply last month, to 9 percent from 9.4 percent in December, yet employers barely added any jobs. So how did the rate fall so much?

It's because of the two separate surveys the government uses to measure employment.

One is called the payroll survey. About 140,000 companies and government agencies send forms to the Labor Department with information about how many people they employ. They also provide data on wages, hours and other details.

This survey produces the number of jobs gained or lost during the month. In January, the payroll survey showed a net gain of only 36,000 jobs. That's below December's total of 121,000. It's also barely a quarter of the total needed each month just to keep up with growth in the working-age population.

Economists had expected a much better figure. Several recent reports show the economy is rebounding. Factories are churning out more goods, retail sales are rising and consumers are increasingly willing to spend money.

Some of that positive news was reflected in the government's other survey, which covers households. That survey is conducted by the Census Bureau, which asks 60,000 households for the employment status of people living there.

Those without jobs are asked whether they're looking for one. If they're not, they're no longer considered part of the work force and aren't counted as unemployed. The household survey produces the unemployment rate each month.

That survey found a huge jump last month of 589,000 in the number of people who say they are employed. The number of unemployed fell by a similar amount. That pushed the unemployment rate down to 9 percent.

Since November, the rate has fallen by eight-tenths of a percentage point, the steepest two-month fall in 53 years.

The two surveys can diverge sharply, as they did in January, but they tend to even out over time.

The weak job gains in the payroll survey were also likely a result of last month's snowstorms. The harsh weather may have shut down building projects and disrupted other work. The construction industry shed 32,000 jobs, the most since May. Transportation and warehousing firms also reported large cuts.

Positive economic news usually leads discouraged workers to start looking again. As they rejoin the work force and look for jobs, these people are once again counted as unemployed in the household survey. That would drive up the unemployment rate.

Many economists project the unemployment rate will go up temporarily. But they expect it to finish the year slightly below 9 percent.

Published: Tue, Feb 8, 2011