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The Most Persistent Myth About The Unemployment Rate

Jobs

First Posted: 01/11/11 12:18 PM ET Updated: 05/25/11 07:25 PM ET

Every time the government reports that the unemployment rate declined during the previous month, swarms of Internet users say in forums, comment sections and emails that the only reason the jobs situation seemed to improve is because thousands of people had their unemployment insurance benefits cut off.

On Friday, for instance, when the government reported that the unemployment rate fell from 9.8 percent to 9.4 percent, this reporter received an email arguing that the rate is deceptive, "Because 400,000 people with unemployment insurance lost their unemployment insurance benefits in November 2010. These 400,000 were not counted."

This is partly a paranoid conspiracy theory: The idea is that the government is trying to put a positive spin on the economy while it's actually making life harder for people who were laid off through no fault of their own.

Gary Steinberg, spokesman for the Department of Labor's Bureau of Labor Statistics, which reports the national unemployment rate on the first Friday of every month, told HuffPost that this is "the most persistent inaccuracy about the monthly unemployment rate."

In fact, the jobless rate is calculated based on survey data, not the unemployment insurance rolls. Roughly one-third of the nearly 15 million unemployed are not receiving benefits in the first place.

"Each month the Census Bureau conducts a survey of 60,000 households," Steinberg said in an email. "Each household provides labor force information on each member of the household. Everyone unemployed is counted as unemployed, no matter how long they have been unemployed. The survey does not ask about unemployment insurance benefits."

The survey does not simply ask respondents to say if the are "employed" or "unemployed," either.

"Respondents are never asked specifically if they are unemployed, nor are they given an opportunity to decide their own labor force status," according to the BLS website. "Similarly, interviewers do not decide the respondents' labor force classification. They simply ask the questions in the prescribed way and record the answers. Based on information collected in the survey and definitions programmed into the computer, individuals are then classified as employed, unemployed, or not in the labor force."

"Last week," an interviewer might ask, "did you have a job, either full or part time? Include any job from which you were temporarily absent."

Another typical question: "Have you been doing anything to find work during the last 4 weeks?"

And the interviewers aren't just phoning it in, Steinberg said. "In the first month of inclusion in the survey, respondents are typically visited in person," he said. "If their phone is disconnected, they are visited again in person."

One reason the myth has legs is that a growing number of long-term unemployed have received up to 99 weeks of benefits without finding work in the worst economy since the Great Depression, and to some, it seems the government is turning its back on them. The Obama administration estimates that 4 million Americans will exhaust extended unemployment benefits in 2011. (Not all of those people will be "99ers," since 99 weeks of benefits are available only in about half the states.) A lot of these folks are extremely active online.

While the connection between the unemployment rate and the number of insurance recipients may be the most persistent myth, Judy Conti, a lobbyist for the National Employment Law Project, says the idea that unemployment benefits stop people from looking for work is the most pernicious. The latter belief has been repeatedly espoused by members of Congress, even though available research doesn't really support it. Making matters worse, several members of Congress appear not to understand the basics of legislation providing additional weeks of benefits.

"I think the one thing these last couple of years have shown us is just how much people don't understand about unemployment and about unemployment insurance," Conti said. "The ignorance runs rampant."

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