The U.S. economy added 195,000 jobs in June, a healthy gain. And more jobs were added in April and May than earlier estimated. But the unemployment rate didn’t change: It was 7.6 percent for the second straight month.
Why did the unemployment rate stay flat when employers added many more jobs?
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 June, the payroll survey showed that companies added 202,000 jobs and that federal, state and local governments shed 7,000.
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 June, the household survey showed that 177,000 people began looking for work. That’s a sign that they were more confident about their prospects of finding a job. Most of these people found work. But because not all did, the number of unemployed rose 17,000 to nearly 11.8 million. That kept the unemployment rate unchanged.
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.
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.
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