What do employment statistics tell us about the economy?

• Author: Adams, Tucker Hart
• Position: THE ECONOMIST

AS I TOLD A BUSINESSMAN WHO SAID HE only had time to pay attention to one statistic, the single most important piece of economic data is the employment figure.

The United States economy added 288,000 jobs in June, the fifth consecutive month of gains exceeding 200,000. The unemployment rate fell to 6.1 percent, continuing a decline that began in November 2009. Clearly the economy is improving on the job front. But, is there more to the story?

Each month the federal government's Current Employment Statistics (CES) program surveys approximately 144,000 businesses and government agencies, representing approximately 554,000 individual worksites, to provide detailed industry data on employment on non-farm payrolls.

The data exclude proprietors, the unincorporated self-employed, unpaid volunteers or family employees, farm employees and domestic employees. Government employment covers only civilian employees; military personnel are excluded.

People on establishment payrolls who are on paid sick leave (for cases in which pay is received directly from the firm), on paid holiday, on paid vacation, or who work during part of the pay period even though they are unemployed or on strike during the rest of the period are counted as employed. What this tells us is that those reported as "employed" don't necessarily work the entire month, or full-time. One reason for the sluggish recovery from the Great Recession is that about 1 million of the middle- and high-wage jobs lost during the downturn have not been replaced, while there are 1.8 million more jobs in low-wage industries.

The government conducts a second, smaller employment survey that provides data on people not covered in the CES, including those who are unemployed. The Current Population Survey is a monthly assessment of households that provides a comprehensive body of data on the labor force...