Employment Situation: July 2007

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EMPLOYMENT SITUATION: JULY 2007


Nonfarm payroll employment continued to trend up (+92,000) in July, and the
unemployment rate (4.6 percent) was essentially unchanged, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. Employment grew in
several service-providing industries. Average hourly earnings rose by 6 cents,
or 0.3 percent.

Unemployment (Household Survey Data)

Both the number of unemployed persons (7.1 million) and the unemployment
rate (4.6 percent) were about unchanged in July. The jobless rate has ranged
from 4.4 to 4.6 percent since September 2006. In July, the unemployment rates
for adult men (4.2 percent), teenagers (15.2 percent), whites (4.2 percent),
blacks (8.0 percent), and Hispanics (5.9 percent) were little changed. The un-
employment rate for adult women edged up to 4.1 percent. The unemployment rate
for Asians was 3.0 percent, not seasonally adjusted. (See tables A-1, A-2,
and A-3.)

The number of persons unemployed 27 weeks and over rose by 188,000 to 1.3
million in July. This group accounted for 18.4 percent of total unemployment,
up from 16.2 percent in June. (See table A-9.)

The number of persons unemployed due to job loss rose by 253,000 in July.
This group accounted for 50.9 percent of the unemployed, up from 48.7 percent
a month earlier. (See table A-8.)

Total Employment and the Labor Force (Household Survey Data)

In July, total employment (146.1 million) and the civilian labor force (153.2
million) were little changed. The employment-population ratio (63.0 percent) was
about unchanged, and the labor force participation rate held at 66.1 percent. (See
table A-1.)


Persons Not in the Labor Force (Household Survey Data)

Nearly 1.4 million persons (not seasonally adjusted) were marginally attached
to the labor force in July, down by 146,000 from a year earlier. These individuals
wanted and were available to work and had looked for a job sometime during the prior
12 months. They were not counted as unemployed because they had not searched for work
in the 4 weeks preceding the survey. Among the marginally attached, there were 367,000
discouraged workers in July, about the same number as a year earlier. Discouraged work-
ers were not currently looking for work specifically because they believed no jobs were
available for them. The remaining 1.0 million persons marginally attached to the labor
force in July had not searched for work in the 4 weeks preceding the survey for reasons
such as school attendance and family responsibilities. (See table A-13.)

Industry Payroll Employment (Establishment Survey Data)

Total payroll employment continued to trend up in July (+92,000), reaching 138.1 mil-
lion, seasonally adjusted. Thus far in 2007, employment has increased by an average of
136,000 per month, compared with an average monthly gain of 189,000 in 2006. Over the
month, employment rose in several service-providing industries and changed little in the
goods-producing industries. (See table B-1.)

Health care employment grew by 36,000 in July, with gains of 9,000 jobs each in offices
of physicians and in hospitals and 8,000 in home health care. Over the year, health care
employment has expanded by 377,000. Employment in social assistance continued to trend up
in July; the industry has added 99,000 jobs over the past 12 months.

In financial activities, employment rose by 27,000 in July. Credit intermediation and
related activities added 11,000 jobs over the month, offsetting a decline of a similar mag-
nitude in June. Over the month, employment continued to grow in insurance carriers and re-
lated activities (+6,000) and in securities, commodity contracts, and investments (+4,000).
Over the year, these industries have added 42,000 and 32,000 jobs, respectively.

Employment in food services and drinking places continued to trend up in July (+22,000).
Job growth in this industry has averaged 29,000 per month in 2007, about the same as the
average monthly increase in 2006. Over the month, wholesale trade employment continued to
increase, while retail trade employment was unchanged.

Within professional and business services, computer systems design and related services
continued to grow, adding 15,000 jobs over the month. Business support services employment
also rose in July (+9,000). Temporary help services employment continued to trend down
(-7,000); this industry has lost 52,000 jobs so far in 2007.

In the goods-producing sector, employment changed little in both manufacturing and con-
struction in July. Manufacturing has lost 175,000 jobs over the past 12 months. Since its
most recent peak in September, employment in construction has fallen by 75,000.

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Weekly Hours (Establishment Survey Data)

In July, the average workweek for production and nonsupervisory workers on private non-
farm payrolls decreased by 0.1 hour to 33.8 hours, seasonally adjusted. Average weekly
hours and overtime hours for factory workers were unchanged over the month. (See table B-2.)

The index of aggregate weekly hours of production and nonsupervisory workers on private
nonfarm payrolls fell by 0.1 percent in July to 107.7 (2002=100). The manufacturing index
was unchanged. (See table B-5.)

Hourly and Weekly Earnings (Establishment Survey Data)

Average hourly earnings of production and nonsupervisory workers on private nonfarm pay-
rolls increased by 6 cents, or 0.3 percent, in July to $17.45, seasonally adjusted. This
increase followed gains of 7 cents in both May and June. Average weekly earnings were lit-
tle changed over the month at $589.81. Over the year, average hourly earnings rose by 3.9
percent while weekly earnings rose by 3.6 percent. (See table B-3.)

______________________________


The Employment Situation for August 2007 is scheduled to be released on Friday,
September 7, at 8:30 A.M. (EDT).






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Frequently Asked Questions about Employment and Unemployment Estimates


Why are there two monthly measures of employment?

The household survey and establishment survey both produce sample-based
estimates of employment and both have strengths and limitations. The estab-
lishment survey employment series has a smaller margin of error on the mea-
surement of month-to-month change than the household survey because of its
much larger sample size. An over-the-month employment change of 104,000 is
statistically significant in the establishment survey, while the threshold for
a statistically significant change in the household survey is about 400,000.
However, the household survey has a more expansive scope than the establishment
survey because it includes the self-employed, unpaid family workers, agricul-
tural workers, and private household workers, who are excluded by the estab-
lishment survey. The household survey also provides estimates of employment
for demographic groups.


Are undocumented immigrants counted in the surveys?

Neither the establishment nor household survey is designed to identify the
legal status of workers. Thus, while it is likely that both surveys include
at least some undocumented immigrants, it is not possible to determine how many
are counted in either survey. The household survey does include questions about
whether respondents were born outside the United States. Data from these ques-
tions show that foreign-born workers accounted for about 15 percent of the labor
force in 2006 and about 47 percent of the net increase in the labor force from
2000 to 2006.


Why does the establishment survey have revisions?

The establishment survey revises published estimates to improve its data
series by incorporating additional information that was not available at the
time of the initial publication of the estimates. The establishment survey
revises its initial monthly estimates twice, in the immediately succeeding
2 months, to incorporate additional sample receipts from respondents in the
survey. For more information on the monthly revisions, please visit
[url=http://www.bls.gov/ces/cesrevinfo.htm]CES employment revisions and sample collection rates[/url].

On an annual basis, the establishment survey incorporates a benchmark
revision that re-anchors estimates to nearly complete employment counts
available from unemployment insurance tax records. The benchmark helps to
control for sampling and modeling errors in the estimates. For more infor-
mation on the annual benchmark revision, please visit [url=http://www.bls.gov/]Bureau of Labor Statistics Home Page[/url]
web/cesbmart.htm.


Has the establishment survey understated employment growth because it excludes
the self-employed?

While the establishment survey excludes the self-employed, the household
survey provides monthly estimates of unincorporated self-employment. These
estimates have shown no substantial growth in recent years.


Does the establishment survey sample include small firms?

Yes; about 40 percent of the establishment survey sample is comprised of
business establishments with fewer than 20 employees. The establishment survey
sample is designed to maximize the reliability of the total nonfarm employment
estimate; firms from all size classes and industries are appropriately sampled
to achieve that goal.

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Does the establishment survey account for employment from new businesses?

Yes; monthly establishment survey estimates include an adjustment to account
for the net employment change generated by business births and deaths. The ad-
justment comes from an econometric model that forecasts the monthly net jobs im-
pact of business births and deaths based on the actual past values of the net
impact that can be observed with a lag from the Quarterly Census of Employment
and Wages. The establishment survey uses modeling rather than sampling for this
purpose because the survey is not immediately able to bring new businesses into
the sample. There is an unavoidable lag between the birth of a new firm and its
appearance on the sampling frame and availability for selection. BLS adds
new businesses to the survey twice a year.


Is the count of unemployed persons limited to just those people receiving
unemployment insurance benefits?

No; the estimate of unemployment is based on a monthly sample survey of
households. All persons who are without jobs and are actively seeking and
available to work are included among the unemployed. (People on temporary
layoff are included even if they do not actively seek work.) There is no
requirement or question relating to unemployment insurance benefits in the
monthly survey.


Does the official unemployment rate exclude people who have stopped looking for
work?

Yes; however, there are separate estimates of persons outside the labor force
who want a job, including those who have stopped looking because they believe no
jobs are available (discouraged workers). In addition, alternative measures of
labor underutilization (discouraged workers and other groups not officially counted
as unemployed) are published each month in the Employment Situation news release.





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Technical Note


This news release presents statistics from two major surveys, the Current
Population Survey (household survey) and the Current Employment Statistics
survey (establishment survey). The household survey provides the informa-
tion on the labor force, employment, and unemployment that appears in the
A tables, marked HOUSEHOLD DATA. It is a sample survey of about 60,000 house-
holds conducted by the U.S. Census Bureau for the Bureau of Labor Statistics
(BLS).

The establishment survey provides the information on the employment,
hours, and earnings of workers on nonfarm payrolls that appears in the
B tables, marked ESTABLISHMENT DATA. This information is collected from
payroll records by BLS in cooperation with state agencies. The sample
includes about 160,000 businesses and government agencies covering ap-
proximately 400,000 individual worksites. The active sample includes
about one-third of all nonfarm payroll workers. The sample is drawn
from a sampling frame of unemployment insurance tax accounts.

For both surveys, the data for a given month relate to a particular week
or pay period. In the household survey, the reference week is generally
the calendar week that contains the 12th day of the month. In the establish-
ment survey, the reference period is the pay period including the 12th,
which may or may not correspond directly to the calendar week.

Coverage, definitions, and differences between surveys

Household survey. The sample is selected to reflect the entire
civilian noninstitutional population. Based on responses to a series of
questions on work and job search activities, each person 16 years and over
in a sample household is classified as employed, unemployed, or not in the
labor force.

People are classified as employed if they did any work at all as paid
employees during the reference week; worked in their own business, pro-
fession, or on their own farm; or worked without pay at least 15 hours
in a family business or farm. People are also counted as employed if they
were temporarily absent from their jobs because of illness, bad weather,
vacation, labor-management disputes, or personal reasons.

People are classified as unemployed if they meet all of the following
criteria: They had no employment during the reference week; they were
available for work at that time; and they made specific efforts to find
employment sometime during the 4-week period ending with the reference
week. Persons laid off from a job and expecting recall need not be
looking for work to be counted as unemployed. The unemployment data
derived from the household survey in no way depend upon the eligibility
for or receipt of unemployment insurance benefits.

The civilian labor force is the sum of employed and unemployed persons.
Those not classified as employed or unemployed are not in the labor force.
The unemployment rate is the number unemployed as a percent of the labor
force. The labor force participation rate is the labor force as a percent
of the population, and the employment-population ratio is the employed as a
percent of the population.

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Establishment survey. The sample establishments are drawn from pri-
vate nonfarm businesses such as factories, offices, and stores, as well
as federal, state, and local government entities. Employees on nonfarm
payrolls are those who received pay for any part of the reference pay
period, including persons on paid leave. Persons are counted in each job
they hold. Hours and earnings data are for private businesses and relate
only to production workers in the goods-producing sector and nonsupervisory
workers in the service-providing sector. Industries are classified on the
basis of their principal activity in accordance with the 2002 version of
the North American Industry Classification System.

Differences in employment estimates. The numerous conceptual and method-
ological differences between the household and establishment surveys result
in important distinctions in the employment estimates derived from the sur-
veys. Among these are:

--The household survey includes agricultural workers, the self-employed,
unpaid family workers, and private household workers among the employed.
These groups are excluded from the establishment survey.

--The household survey includes people on unpaid leave among the employed.
The establishment survey does not.

--The household survey is limited to workers 16 years of age and older.
The establishment survey is not limited by age.

--The household survey has no duplication of individuals, because in-
dividuals are counted only once, even if they hold more than one job. In
the establishment survey, employees working at more than one job and thus
appearing on more than one payroll would be counted separately for each
appearance.

Seasonal adjustment

Over the course of a year, the size of the nation's labor force and the
levels of employment and unemployment undergo sharp fluctuations due to
such seasonal events as changes in weather, reduced or expanded production,
harvests, major holidays, and the opening and closing of schools. The ef-
fect of such seasonal variation can be very large; seasonal fluctua-
tions may account for as much as 95 percent of the month-to-month changes
in unemployment.

Because these seasonal events follow a more or less regular pattern
each year, their influence on statistical trends can be eliminated by ad-
justing the statistics from month to month. These adjustments make non-
seasonal developments, such as declines in economic activity or increases
in the participation of women in the labor force, easier to spot. For
example, the large number of youth entering the labor force each June is
likely to obscure any other changes that have taken place relative to May,
making it difficult to determine if the level of economic activity has risen
or declined. However, because the effect of students finishing school in
previous years is known, the statistics for the current year can be adjusted
to allow for a comparable change. Insofar as the seasonal adjustment is made
correctly, the adjusted figure provides a more useful tool with which to ana-
lyze changes in economic activity.

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Most seasonally adjusted series are independently adjusted in both the
household and establishment surveys. However, the adjusted series for many
major estimates, such as total payroll employment, employment in most super-
sectors, total employment, and unemployment are computed by aggregating in-
dependently adjusted component series. For example, total unemployment is
derived by summing the adjusted series for four major age-sex components;
this differs from the unemployment estimate that would be obtained by di-
rectly adjusting the total or by combining the duration, reasons, or more
detailed age categories.

For both the household and establishment surveys, a concurrent seasonal
adjustment methodology is used in which new seasonal factors are calculated
each month, using all relevant data, up to and including the data for the
current month. In the household survey, new seasonal factors are used to
adjust only the current month's data. In the establishment survey, however,
new seasonal factors are used each month to adjust the three most recent
monthly estimates. In both surveys, revisions to historical data are made
once a year.