The Marketplace Report: Inflated Fed Jobs Numbers?
Back now with DAY TO DAY.
We find out tomorrow what the official unemployment rate is. Most economists predict January's rate to remain steady at 4.9 percent, but the way that figure is calculated may be skewed. A new report out today says the labor department may be undercounting the number of people without jobs. Marketplace's Tess Vigeland is here.
And Tess, first let's review how the labor department gathers these statistics each month, and how do they do that?
Ms. TESS VIGELAND (Host, Marketplace): Well, the labor department conducts two separate surveys to come up with these statistics. For the unemployment figure, they poll 60,000 households. They just call them up and ask, is there anyone in the house who is looking for work? The other figure is the number of new jobs that companies create within a month, and this is the one that economists really pay the most attention to. They tally up all the people on company payrolls across the country, everybody except farms, and they figure out if there are more or fewer jobs than the month before.
BRAND: And so, where does the math allegedly go wrong?
Ms. VIGELAND: Well, the issue here, according to the Center for Economic and Policy Research, is the people who choose not to participate in the phone survey. John Schmitt is the lead author of this report.
Mr. JOHN SCHMITT (Economist, Center for Economic and Policy Research): The people who are not participating are just proportionally not likely to be employed, and we're not capturing that in the survey, and that's creating some distortion in the numbers that are coming out of this very good, very well done survey that we rely on to get the data and to understand the economy of the world that we live in.
Ms. VIGELAND: And now, because of that, the center says that the deposit is undercounting the number of people who are unemployed by about three million. Again, this is because people are not picking up the phone or they're deciding not to answer these survey questions. Assuming that that is the case, the three million people, the current unemployment rate would actually be 6.4 percent instead of 4.9 percent, and that is a pretty big difference.
BRAND: And so, are other economists worried about that?
Ms. VIGELAND: Not particularly. One economist we spoke with, Joel Naroff at Commerce Bank, essentially says that this is not something that we should be worried about.
Mr. JOEL NAROFF (Chief Economist, Commerce Bank): Well, we understand that the unemployment rate is not a perfect number. The issue is, are the mistakes that are made and the adjustments that are made for those mistakes consistent over time? So when we look at an unemployment rate we know, relatively speaking, it's low or it's high.
Ms. VIGELAND: So again, he's essentially saying that if there is a problem with the survey, well, the problem has been there since they started taking the surveys. So again, we will find out tomorrow whether, relatively speaking, the unemployment rate is low or high.
And later today on MARKETPLACE, the report from the highway. Truckers up in arms over Coca Cola's Super Bowl ad.
BRAND: Tess Vigeland of Public Radio's daily business show, MARKETPLACE. And MARKETPLACE is produced by American Public Media.
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