Why the Numbers Are Different
As was indicated, the government uses a scientific survey to determine the number of individuals who are unemployed and they maintain a record of individuals who are receiving state unemployment benefits. These two sources do not equate; in fact, they are often very different. Ultimately, the number of published unemployed is much larger than the number of persons receiving unemployment insurance benefits. This section will discuss the major reasons these two sources do not match.
The unemployed can be broken down into specific categories, not all of which typically qualify for U.I. benefits. These categories include: persons who have lost jobs or are on temporary lay-off (job losers), persons who voluntarily left one job and are looking for another (job leavers), persons who are seeking their first job (new entrants), persons that are returning to the labor market after a period of absence (reentrants), persons who have exhausted their U.I. benefits, and individuals who never apply for U.I. benefits.
The Current Population Survey is able to quantify the number of unemployed in Michigan in four categories: job losers, job leavers, new entrants, and reentrants. As demonstrated below, only job losers will generally be eligible for unemployment insurance. However, the individuals in each of the above four categories all meet the definition of unemployment and would be classified as unemployed according to the Current Population Survey.
Job Losers The first category, job losers, includes all individuals who have lost their job due to temporary layoff, long term layoff, have permanently lost their jobs, or who have completed temporary jobs. In many instances, these individuals would qualify for U.I. benefits. However, in order to qualify, an individual in this category must have had qualified earnings from a liable employer and must be available for, actively seeking, and able to accept suitable work. These individuals would also be defined as unemployed by the Current Population Survey. In 2006, job losers accounted for just over half (54.8 percent) of all unemployed individuals (Figure 1).
Individuals in the remaining categories of the unemployed generally do not qualify for unemployment benefits. These categories include:
Job leavers (8.3 percent) are unemployed persons who quit or otherwise terminate their employment voluntarily and immediately begin looking for work. Typically job leavers are individuals who are looking for a new job for any number of reasons including higher compensation, better working conditions, or a better fit with their skill set. This would also include people who are switching occupations or industries altogether. While these people may have worked for a liable employer and had qualified earnings, they may not qualify for benefits because they voluntarily ended the employment relationship. Although job leavers may not qualify for unemployment benefits, they are certainly unemployed according to the Current Population Survey because they are presently not working and they are actively seeking employment. A job leaver is one example of an individual who is counted in the official jobless rate but would not qualify for unemployment benefits.
Reentrants (28.9 percent) are persons who previously worked but were out of the labor force prior to beginning their current job search. A reentrant could be an individual who had previously exited the labor market to return to school, or a person with family obligations such as raising children or caring for an elderly or sick relative. Because these individuals have been out of the workforce for a period of time, they may have had no qualified earnings and did not work for a liable employer in the past four quarters. Therefore, people in this category typically would not qualify for unemployment benefits. In contrast, once a reentrant is back in the labor market, and actively seeking employment, but not currently working, they would be counted as unemployed by the Current Population Survey. Thus, a reentrant is another example of a person counted as unemployed who would not qualify for unemployment benefits.
Finally, new entrants (7.9 percent) are persons entering the labor market seeking their first job. This can include teen workers and recent high school and college graduates. While these are the more common examples, a new entrant can be of any age and have any level of education. Since these individuals have no prior work experience, they obviously have no prior employer and are not eligible for unemployment benefits. Because new entrants into the labor market are available for, and actively seeking employment and because they are currently not working, they would be classified as unemployed according to the Current Population Survey.
Under Michigan law, an individual is eligible to draw a maximum of 26 weeks of U.I. benefits. After this, the individual becomes an "exhaustee"; that is, they have "exhausted" their maximum allowable benefit and are no longer eligible for benefits. Despite no longer receiving an unemployment check, this person would still be counted as unemployed according to the Current Population Survey so long as they are actively seeking employment and do not currently work.
In 2006, 21.1 percent of all unemployed individuals in Michigan were jobless for 27 weeks or longer. Each of these approximately 75,000 individuals would have exhausted their unemployment benefits - assuming they were eligible - and would be ineligible for further benefits. Yet they continued to be captured in the official jobless rate.