A tale of 2 employment surveys, at a glance

WASHINGTON (AP) — The U.S. economy added 162,000 jobs in June, the fewest since March. Yet the unemployment rate fell to 7.4 percent from 7.6 percent — the largest decline since February.

Why did the unemployment rate drop so much after only modest job growth? Because the government does one survey to learn how many jobs were created and another to determine the unemployment rate. The two surveys can sometimes produce different results.

One is called the payroll survey. It asks mostly large companies and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost. In July, the payroll survey showed that companies and government agencies added 162,000 jobs.

The other is the household survey. Government workers ask whether the adults in a household have a job. Those who don’t have a job are asked whether they’re looking for one. If they are, they’re considered unemployed. If they aren’t looking for a job, they’re not considered part of the workforce and aren’t counted as unemployed. The household survey produces each month’s unemployment rate.

In July, the household survey showed that 227,000 more people had jobs than the previous month. And another 37,000 dropped out of the workforce and stopped looking for work. That lowered the number of unemployed and pushed the unemployment rate down.

Unlike the payroll survey, the household survey captures farm workers, the self-employed and people who work for new companies. It also does a better job of capturing hiring by small businesses. The number of people who said they were self-employed jumped 241,000 to an eight-month high of 9.7 million.

But the household survey is more volatile from month to month. The Labor Department surveys just 60,000 households, a small fraction of the more than 100 million U.S. households.

By contrast, the payroll survey seeks information from 145,000 companies and government agencies. They employ roughly one-third of non-farm employees. The employers send forms to the Labor Department or fill out online surveys, noting how many people they employ. They also provide pay, hours worked and other details.

Most Americans focus more on the unemployment rate, which comes from the household survey. But economists generally prefer the jobs figure from the payroll survey. They note that the surveys tend to even out over time.

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