The Seasons Change, and So Do I
With most school districts in the country having resumed operations by this last week, someone asked me about the effect of people going back to school on the country’s economy. Well, this is actually very simple. Every year when school vacations begin, unemployment goes up and when school starts back up, the nation’s unemployment rate goes back down. Total employment usually goes up in the summer as well, as many outside jobs open up, especially for teens.
Definitions are important here, as how we define things affects how we measure them. The unemployment rate is not how many people do not have jobs, as not everyone is looking for a job. School children in high school often do not seek jobs in the summer, but even fewer look for jobs during the school year. Should we count as unemployed those who aren’t even in the market? The answer is no. Think of someone calling people up in a survey. They first ask the person’s age, then whether the person has a job. Then they ask if the person looked for a job in the past month. Those who neither have a job nor have looked for a job are counted as not being in the labor force. The rest, those with jobs or have actively looked for a job in the last month, are counted as being in the labor force. Of those in the labor force, those who do not have a job, are counted as unemployed. So, to be counted among the unemployed, a person has to be without a job now and has to have been actively looking for work.
A bureau within the U.S. Department of Labor, the Bureau of Labor Statistics (BLS), surveys a rather large group of households across the country to find out what percent of the labor force is without a job, the unemployment rate. Below are some historical unemployment figures from the BLS website.
Labor Force Statistics from the Current Population Survey
| Series Id: LNU04000000 Not Seasonally Adjusted Series title: (Unadj) Unemployment Rate Labor force status: Unemployment rate Type of data: Percent Age: 16 years and over |
|||||||||||||
|
Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
Annual |
|
1999 |
4.8 |
4.7 |
4.4 |
4.1 |
4.0 |
4.5 |
4.5 |
4.2 |
4.1 |
3.8 |
3.8 |
3.7 |
4.2 |
|
2000 |
4.5 |
4.4 |
4.3 |
3.7 |
3.8 |
4.1 |
4.2 |
4.1 |
3.8 |
3.6 |
3.7 |
3.7 |
4.0 |
|
2001 |
4.7 |
4.6 |
4.5 |
4.2 |
4.1 |
4.7 |
4.7 |
4.9 |
4.7 |
5.0 |
5.3 |
5.4 |
4.7 |
|
2002 |
6.3 |
6.1 |
6.1 |
5.7 |
5.5 |
6.0 |
5.9 |
5.7 |
5.4 |
5.3 |
5.6 |
5.7 |
5.8 |
|
2003 |
6.5 |
6.4 |
6.2 |
5.8 |
5.8 |
6.5 |
6.3 |
6.0 |
5.8 |
5.6 |
5.6 |
5.4 |
6.0 |
|
2004 |
6.3 |
6.0 |
6.0 |
5.4 |
5.3 |
5.8 |
5.7 |
5.4 |
5.1 |
5.1 |
5.2 |
5.1 |
5.5 |
|
2005 |
5.7 |
5.8 |
5.4 |
4.9 |
4.9 |
5.2 |
5.2 |
4.9 |
4.8 |
4.6 |
4.8 |
4.6 |
5.1 |
|
2006 |
5.1 |
5.1 |
4.8 |
4.5 |
4.4 |
4.8 |
5.0 |
4.6 |
4.4 |
4.1 |
4.3 |
4.3 |
4.6 |
|
2007 |
5.0 |
4.9 |
4.5 |
4.3 |
4.3 |
4.7 |
4.9 |
4.6 |
4.5 |
4.4 |
4.5 |
4.8 |
4.6 |
|
2008 |
5.4 |
5.2 |
5.2 |
4.8 |
5.2 |
5.7 |
6.0 |
6.1 |
6.0 |
6.1 |
6.5 |
7.1 |
5.8 |
|
2009 |
8.5 |
8.9 |
9.0 |
8.6 |
9.1 |
9.7 |
9.7 |
9.6 |
|
|
|
|
|
A bureau within the U.S. Department of Labor, the Bureau of Labor Statistics (BLS), surveys a rather large group of households across the country to find out what percent of the labor force is without a job, the unemployment rate. Below are some historical unemployment figures from the BLS website.
Note that every June this number seems to go up from the month before and every September the number drops back down by about the same amount. Every December, the figure drops off and rises in January. All of these amount to predictable patterns, that economists and statisticians call “seasonality.”
By the way, here are the unemployment rates for the same time period, but with adjustments made for seasonality.
Labor Force Statistics from the Current Population Survey
| Series Id: LNS14000000 Seasonal Adjusted Series title: (Seas) Unemployment Rate Labor force status: Unemployment rate Type of data: Percent Age: 16 years and over |
|||||||||||||
|
Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
Annual |
|
1999 |
4.3 |
4.4 |
4.2 |
4.3 |
4.2 |
4.3 |
4.3 |
4.2 |
4.2 |
4.1 |
4.1 |
4.0 |
|
|
2000 |
4.0 |
4.1 |
4.0 |
3.8 |
4.0 |
4.0 |
4.0 |
4.1 |
3.9 |
3.9 |
3.9 |
3.9 |
|
|
2001 |
4.2 |
4.2 |
4.3 |
4.4 |
4.3 |
4.5 |
4.6 |
4.9 |
5.0 |
5.3 |
5.5 |
5.7 |
|
|
2002 |
5.7 |
5.7 |
5.7 |
5.9 |
5.8 |
5.8 |
5.8 |
5.7 |
5.7 |
5.7 |
5.9 |
6.0 |
|
|
2003 |
5.8 |
5.9 |
5.9 |
6.0 |
6.1 |
6.3 |
6.2 |
6.1 |
6.1 |
6.0 |
5.8 |
5.7 |
|
|
2004 |
5.7 |
5.6 |
5.8 |
5.6 |
5.6 |
5.6 |
5.5 |
5.4 |
5.4 |
5.5 |
5.4 |
5.4 |
|
|
2005 |
5.2 |
5.4 |
5.2 |
5.2 |
5.1 |
5.1 |
5.0 |
4.9 |
5.0 |
5.0 |
5.0 |
4.8 |
|
|
2006 |
4.7 |
4.8 |
4.7 |
4.7 |
4.7 |
4.6 |
4.7 |
4.7 |
4.5 |
4.4 |
4.5 |
4.4 |
|
|
2007 |
4.6 |
4.5 |
4.4 |
4.5 |
4.5 |
4.6 |
4.7 |
4.7 |
4.7 |
4.8 |
4.7 |
4.9 |
|
|
2008 |
4.9 |
4.8 |
5.1 |
5.0 |
5.5 |
5.6 |
5.8 |
6.2 |
6.2 |
6.6 |
6.8 |
7.2 |
|
|
2009 |
7.6 |
8.1 |
8.5 |
8.9 |
9.4 |
9.5 |
9.4 |
9.7 |
|
|
|
|
|
The rise in summer unemployment is mostly in teenage unemployment as teens enter the labor market looking for summer jobs. Summer employment actually expands, but so does unemployment as not all of the job seekers find what they are looking for. With the start of school, this pattern reverses itself. Not that with increased retail activity in the Christmas shopping season, the same thing happens. To keep from confusing monthly rises and falls in employment or unemployment rates with more serious changes beyond these mere seasonal patterns, economists and statisticians adjust the raw figures by the seasonal pattern. If December unemployment rates run 0.2 percentage points lower than average and January’s rates run 0.3 percentage points, then these months’ rates are adjusted by 0.2 upward in December and 0.3 percentage points downward in January.
Not only do statisticians make adjustments of this sort, but so do retailers and so do families. For instance, my job is a nine-month position, and I get paid in those nine months. I stash money aside the months I work so that I can maintain a similar spending pattern every month. I can predict it, so I do not get caught by surprise.
So, when you read about monthly changes in employment and unemployment figures or even gasoline pump prices, before being alarmed, check to see if the figures you are viewing are seasonally adjusted or not. While our trees in the deep south may not change that much, our economic seasons change much the way the rest of the country changes.
-MC
September 29th, 2009 at 11:56 pm
As mentioned in the concluding thoughts in regard to gas prices, there are contributing factors in most of the information we come into contact with in the course of a day that are not factored into the opinion we form. For example, in St. Mary Parish last fall our local paper was regularly reporting on the sales tax revenues the parish was bringing in. In particular the paper reported we had not seen a drop in collected revenue and had even seen increases despite the lagging economy in most of the country. The paper failed to acknowledge the large amount of construction and repair work being performed to homes, in particular roofs following Hurricane Gustav and Hurricane Ike. Those sales tax revenues were boosted by the purchase of building materials such as plywood and shingles. Those purchases were not indicative of the spending habits of local households and should not infer that in St. Mary Parish the economy was still booming and our residents were still comfortable making luxury purchases. Our area generally is referred to as having the “oilpatch” economy where we are thriving while other areas are suffering, however, by last fall I believe that even in the “oilpatch” residents were feeling the effects of the recession trickle down to us with layoffs at McDermott and other oil companies affecting many families and those budgets.