The unemployment rate fell sharply last month, to 9.4 percent from 9.8 percent in November, yet employers didn't add that many jobs. So why did the rate fall so much?
It's because of the way the government calculates who's employed and who isn't.
The government does two employment surveys each month.
One is called the payroll survey. It asks companies and government agencies how many people they employ. This survey produces the number of jobs gained or lost during the month. In December, the payroll survey showed a net gain of 103,000 jobs. That was higher than November's 71,000 total but below October's 210,000.
The other is called the household survey. Government workers ask households about the employment status of adults 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.
The number of unemployed fell by 556,000 to 14.5 million last month, according to the household survey. Slightly more than half, or 297,000, of those people said they had found jobs. That's many more than the 103,000 new jobs that employers said they created. The two figures vary month to month but over time they tend to even out.
The rest of the drop in the number of unemployed came from people who left the work force. As jobs remain scarce, many people who are out of work and have looked for months give up.
Once a recovery gets under way, positive news _ like rising stock prices or companies announcing plans to hire _ 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. And they drive up the unemployment rate.
That's why many economists project the unemployment rate could rise again, or at least remain near its current level, even if the economy were to improve.
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