A tale of 2 employment surveys, at a glance

AP News
Posted: Sep 06, 2013 5:59 PM

The U.S. economy added just 169,000 jobs last month. And the unemployment rate fell from 7.4 percent in July to 7.3 percent, a nearly five-year low.

But the unemployment rate fell because more people stopped looking for work — and not because of the modest job gains.

How come the job gains weren't credited with lowering the unemployment rate? Because the government does one survey to learn how many jobs were created and another to determine the unemployment rate. The two surveys can sometimes produce different results.

One is called the payroll survey. It asks mostly large companies and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost. In August, the payroll survey showed that companies and government agencies added 169,000 jobs.

The other is the household survey. Government workers ask whether the adults in a household have a job. Those who don't have a job are asked whether they're looking for one. If they are, they're considered unemployed. If they aren't looking for a job, they're not considered part of the workforce and aren't counted as unemployed. The household survey produces each month's unemployment rate.

In August, the household survey showed that nearly 200,000 fewer Americans were unemployed. But the decline was because those people stopped looking for work, not because they found jobs. That lowered the total number of unemployed Americans to 11.3 million, which pushed the unemployment rate down.

Unlike the payroll survey, the household survey captures farm workers, the self-employed and people who work for new companies. It also does a better job of capturing hiring by small businesses.

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But the household survey is more volatile from month to month. The Labor Department surveys just 60,000 households, a small fraction of the more than 100 million U.S. households.

By contrast, the payroll survey seeks information from 145,000 companies and government agencies. They employ roughly one-third of non-farm employees. The employers send forms to the Labor Department or fill out online surveys, noting how many people they employ. They also provide pay, hours worked and other details.

Most Americans focus more on the unemployment rate, which comes from the household survey. But economists generally prefer the jobs figure from the payroll survey. They note that the surveys tend to even out over time.