The Bureau of Labor Statistics announced recently that it would be changing the monthly survey it uses to estimate the various forms of unemployment to more accurately count the long-term unemployed. Unfortunately, that will not make the unemployment rate announced each month more accurate.
Noting an “unprecedented rise in the number of persons with very long durations of unemployment” over the last two years, the BLS announced:
Effective with data for January 2011, the Current Population Survey (CPS) will be modified to allow respondents to report longer durations of unemployment. Presently, the CPS accepts unemployment durations of up to 2 years; any response of unemployment duration greater than this is entered as 2 years. Starting with data for January 2011, respondents will be able to report unemployment durations of up to 5 years. This change will likely affect estimates of average (mean) duration of unemployment. The change will not affect the estimate of the number of unemployed persons and will not affect other data series on the duration of unemployment.
That last sentence is important. The unemployment rate announced by the BLS each month only includes those who are still receiving unemployment insurance benefits, which means that anyone whose benefits have expired is not counted in those figures. That makes the actual unemployment rate far higher than the rate the government announces — by millions of people in the current environment.
So the government recognizes the need to count the long-term unemployed for the purpose of statistics that no one pays attention to, but not for the purposes of the most important numbers they give the public.