Meltdown 101: Which Jobs Reports Tell Full Story?

Q: What does the monthly unemployment report measure?

A: The monthly unemployment report is based on a Census Bureau survey of 60,000 U.S. households. The survey asks respondents several questions, including whether they have a job, are looking for a job, or are so discouraged that they have quit looking for work altogether.

The report lays out a whole range of unemployment rates. The most-cited rate only counts people actively looking for work; the latest unemployment report, released on May 8, calculated that rate as 8.9 percent. A much broader unemployment rate — 15.8 percent in the latest report — also includes everyone who has dropped out of the labor force or has been forced into part-time work.

Q: Why do these reports seem to contradict each other sometimes?

A: The main reason is that the jobless claims report only catches one piece of the puzzle — the number of jobs being shed. But sometimes, the unemployment rate can climb even if fewer jobs are cut. That's because the unemployment rate also accounts for the all-important factor of job creation.

Even if employers don't shed any jobs, the unemployment rate can climb if they don't create enough new jobs to absorb all the graduates and immigrants who enter the work force each month.