5-14-2009 Unemployment Insurance Statistics as a Measure of Economic Health

The Dept. of Labor Bureau of Labor Statistics (BLS) constantly publishes new UI claims filings, and the media constantly publishes this information.  I'm confused why the media feels its important to publish this raw number, as opposed to more thorough analysis. 

UI figures just show how many people, who were salaried employees paying into Unemployment Insurance, signed up to receive benefits.  And, of course, this only catches lay-offs.  It also doesn't say how many people stopped getting monthly unemployment insurance payments.  Even if that number were broadcast, it wouldn't indicate how many left UI because they got a new job, or just simply ran out of eligible benefit to receive, or just simply quit looking for work.  Each on of these factors could change the monthly employment delta significantly, but the media still just likes to proclaim the new UI claims.  But, it's very indeterminate information when considered in isolation.   The BLS agrees:

Some people think that to get these figures on unemployment, the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs. But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed. -from the BLS web site

The overall unemployment rate is more useful, because it tries to take more of these factors into account, but it still doesn't track self-employed or seasonal farm workers.  It still relies heavily on guesswork involving recent UI claims, other employment office statistics, labor survey, and what-not.  How the unemployment rate is calculated is described by the BLS, again on their website:

Because unemployment insurance records relate only to persons who have applied for such benefits, and since it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940, when it began as a Work Projects Administration project. It has been expanded and modified several times since then. For instance, beginning in 1994, the CPS estimates reflect the results of a major redesign of the survey. (For more information on the CPS redesign, see Chapter 1, "Labor Force Data Derived from the Current Population Survey," in the BLS Handbook of Methods.) - from BLS web site

I'm also confused why employment status isn't more directly tracked, bypassing this massive statistic guessing game.  Probably, it has something to do with the same reasons we can't have a National ID card, which has been forgotten since the heady security days of post-911. 

Anyway, main point of this article is to ignore the new UI claims, because it's deceptive and leads to incorrect conclusions with much further study.  Use the unemployment rate, flawed as it it.