Monthly employment reports can cause confusion

NEW YORK — At a time when the truth of the job market is difficult to ascertain, the government’s monthly employment numbers sometimes do as much to confuse as to clarify.

Take last month, when the Labor Department reported that the number of jobs on company payrolls increased by 308,000 — at the same time the unemployment rate went up.

Both numbers may well be correct, but to make sense of all the data, it helps to understand the way the government counts.

The unemployment rate — 5.7 percent for March — is based on the government’s monthly survey of households. But it includes only people who have made an effort to look for a job in the past four weeks.

It does not count those who have gone back to school because they can’t find a job or those who have taken a part-time job for less pay. It does not include people who, unable to find work, have set themselves up as home-based consultants. And it does not count people who have given up looking.

If all those people were included, the Labor Department’s own figures show, the figure would be 9.9 percent. Economists say the true rate of people without any job is probably about 7 percent or 7.5 percent.

The number of people working — at least the figure most closely watched by economists — is based on a survey of employers’ payrolls. In March, that figure showed the economy added 308,000 new jobs, rising to 130.55 million. Overall, the United States has lost about 1.96 million jobs in the past three years, but March marked the seventh consecutive month that jobs have increased.

So how can jobs be up and more people be unemployed simultaneously? As the economy improves, more people without jobs are coming back off the sidelines to look for work, the government says. But since they had not been looking previously, they had not been counted as unemployed.

Which leads to a paradox: gradual improvements in the job market that drive up the unemployment rate.