Distortions in Comparing Unadjusted Jobless Claims: Labor Force Increased 41% Since 1981

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NEW YORK (CNNMoney.com) -- The number of Americans filing new unemployment insurance claims jumped last week to a 26-year high, surpassing the number of filings economists had predicted. The Labor Department reported Thursday that initial filings for state jobless benefits surged to 573,000 for the week ended Dec. 6. That was an increase of 58,000 from a revised 515,000 claims in the previous week. It was the highest number of jobless claims since Nov. 27, 1982 when initial filings hit 612,000.

Comment: As the graph above shows, the U.S. labor force has increased from about 110 million in 1982 to about 155 million in 2008, an increase of 41%. That significant increase in the labor force means that an unadjusted comparison of initial jobless claims of 573,000 in 2008 to 612,000 jobless claims in 1982 will be distorted and biased.

The chart below corrects for the increase in labor force, and shows initial claims as a percent of the labor force. Based on that adjustment, the level of initial claims today is the highest since April 1991, not November 1982. So it's closer to a 16-year high on an adjusted basis, not a 26-year high as reported.