“When you look for a job, you can’t find it and you give up, you are now considered statistically employed. But I don’t consider those people employed.”
— President Trump, remarks to CEO town hall, April 4, 2017

The president made these comments as he described the method of calculating the unemployment rate as “ridiculous.” Since no one at the White House, apparently, has explained to the president how the unemployment rate is calculated, here’s a quick and easy briefing.

Spoiler alert: It’s exactly the opposite of what Trump said.

The Facts

The Bureau of Labor Statistics, which is part of the Labor Department, details the process at length on its website.

The data that makes up the unemployment rate comes from a monthly sample of 60,000 households, or about 110,000 people, from 800 geographic areas across the country. Each household is interviewed for four months, so each month about one-quarter of the households are changed. Census Bureau employees interview the households to determine whether people ages 16 and over have jobs, are seeking jobs or are out of the labor force.

Here are the basic concepts used by the BLS:

• People with jobs are employed.
• People who are jobless, looking for a job and available for work are unemployed.
• The labor force is made up of the employed and the unemployed.
• People who are neither employed nor unemployed are not in the labor force.

In other words, a person working some period during the week is considered employed. A person who was laid off and is seeking a new job is unemployed. And a person who is a stay-at-home parent or retired is not in the labor force.

Trump thus has it entirely backward. If you can’t find a job and have given up looking for work, you are considered not in the labor force. You are not considered “statistically employed.” However, within the “not in labor force” category, you would be listed as wanting a job but either discouraged or marginally attached to the workforce. In the most common unemployment rate, known as the U-3, you are considered unemployed only if you are actively looking for a job. (There is an alternative rate, the U-4, which includes discouraged workers; the rate for February 2017 increases from 4.7 percent to 5 percent in the U-4.)

America's monthly jobs report can be hard to understand. Here's what you need to know about non-farm payroll employment and the unemployment rate—with gummy bears to help explain. (Kate M. Tobey, Gillian Brockell, Jhaan Elker/The Washington Post)

Speaking to the chief executives, Trump also repeated his Four-Pinocchio claim that “100 million people” are seeking jobs. “A lot of those people came out and voted for me.” Trump said. “I call them the forgotten man, the forgotten woman. But a lot of those people — a good percentage of them — would like to have jobs, and they don’t.”

Trump uses an exaggerated number for the people not in the labor force. But as we have explained repeatedly, most of those people — 93 percent — do not want jobs. That’s because they are people who are retired, students, stay-at-home parents or disabled.

The Pinocchio Test

We can only imagine the confusion among the corporate chieftains as they heard the president utter gibberish about the unemployment rate. Let’s hope this briefing finds its way to the president and he speaks with more authority in the future.

Four Pinocchios

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“When you look for a job, you can’t find it and you give up. You are now considered statistically employed. But I don’t consider those people employed.”
at the CEO Town hall, Washington, DC
Tuesday, April 4, 2017