Table 1. Monthly flows to and from unemployment and average flows for selected months, June 2007-

May 2008 seasonally adjusted

(Numbers in thousands)

June 2007................................ 1,743 1,747 1,805 1,582

July 2007 ................................. 1,765 1,823 1,888 1,582

August 2007 ............................ 1,723 1,767 1,935 1,596

September 2007...................... 1,794 1,836 1,945 1,601

October 2007........................... 1,779 1,809 1,937 1,626

November 2007....................... 1,714 1,877 2,025 1,704

December 2007....................... 1,924 1,956 1,906 1,512

January 2008........................... 1,768 1,773 2,030 1,598

February 2008 ......................... 1,789 1,731 1,916 1,813

March 2008.............................. 2,057 1,990 1,974 1,662

April 2008 ................................ 1,852 1,962 2,129 1,889

May 2008................................. 2,045 2,315 1,854 1,665

June 2007-November 2007 

 average.................................. 1,753 1,810 1,923 1,615

December 2007-May 2008 

 average.................................. 1,906 1,955 1,968 1,690

Flows out of unemployment

Employed to 

unemployed (EU)

Not in the labor 

force to unemployed 

(NU)

Unemployed to 

employed (UE)

Unemployed to not 

in the labor force 

(UN)

Month

NOTE: Flows of unemployment are based on the current month. Thus, the flow from employment to unemployment shown in 

the first row of column 2, for example, reflects a portion of the change in the official measure of unemployment due to transitions 

from employment over the May 2007-June 2007 period.

Flows into unemployment

Why Has Unemployment Risen? Insights From Labor Force 

Flows

Summary 08-05/ June 2008  U.S. Department of Labor  U.S. Bureau of Labor Statistics

Several economic indicators have shown that the labor 

market weakened from May 

2007 to May 2008. The number 

of unemployed persons rose 

from 6.9 million to 8.5 million, 

and the jobless rate increased 

from 4.5 to 5.5 percent. Intuitively, a rise in unemployment 

might be expected to coincide 

with a decline in employment. 

However, total employment, 

as measured by the Current 

Population Survey (CPS), was 

little changed over this period. 

Recently released experimental data series on the flows of 

people between different labor 

force statuses help explain how 

unemployment increased. 

Each month, the Bureau of 

Labor Statistics (BLS) reports 

the number of persons employed, 

unemployed, or not in the labor 

force from data collected in 

the CPS. The net changes in 

these estimates are widely-used 

measures of the overall health 

of the labor market. Underlying 

these often relatively small net 

changes is a great deal more 

churning, as individuals move 

among the various labor force 

categories on a monthly basis. 

The data on labor force flows, 

available from February 1990 

forward, capture the movements 

of persons as they change their 

status between employment and 

unemployment, or enter or leave 

the labor market.1 Data derived 

from labor force status flows 

show that, on average, more 

than 15 million individuals, or 

6.5 percent of the working-age 

population, changed their labor 

force status in some way each 

month from June 2007 to May 

2008. 

Throughout most of 2007, the 

official measure of unemployment rose because of declines 

in the outflows from unemployment; that is, fewer unemployed 

persons were able to find employment (represented as UE 

in Chart 1), and fewer left the 

labor force (represented as UN 

in Chart 1). As a result, the share 

of those who remained jobless 

from month to month (UU) increased from 47 to 51 percent, 

and the number of unemployed 

persons rose.2 (See chart 1.)

In contrast, inflows into unemployment had little effect on 

the rise in unemployment during 

this period. The share of the employed that became unemployed 

(represented as EU in Chart 

2) remained relatively stable 

throughout both 2006 and most 

of 2007, at about 1.2 percent of 

total employment. Similarly, the 

flow of individuals from outside 

the labor force to unemployment 

(represented as NU in Chart 

3) also changed little in 2007, 

hovering around 2.3 percent of 

all persons not in the labor force. 

Thus, the more obvious reasons 

for an increase in unemployment--more employed persons 

losing their jobs or more entrants 

from outside the labor force being unsuccessful in their search 

for employment--did not con-

 1 The labor force status flow data are derived from the CPS, a monthly sample survey 

of approximately 60,000 households. For 

more information on labor force status flows, 

see Zhi Boon, Charles M. Carson, R. Jason 

Faberman, and Randy E. Ilg, “Studying the 

Labor Market with BLS Labor Dynamics Data,” 

Monthly Labor Review, February 2008, pp. 

3-16 and Randy E. Ilg “Analyzing CPS Data 

Using Gross Flows, “Monthly Labor Review, 

September 2005, pp. 10-18. For more on the 

concepts and estimation of gross flow data, see 

Harley J. Frazis, Edwin L. Robison, Thomas 

D. Evans, and Martha A. Duff, “Estimating 

Gross Flows Consistent with Stocks in the 

CPS,” Monthly Labor Review, September 

2005, pp. 3-9. Additional information on the 

new research series of labor force status flows 

can be obtained at: http://stats.bls.gov/cps/

cps_flows.htm 2

 To help discern the overall trends, the 

data presented in the charts were smoothed 

using 3-month moving averages. In each case, 

the official labor force, or stock, estimate was 

used as the denominator.
0

10

20

30

40

50

60

70

Feb-90Feb-91Feb-92Feb-93Feb-94Feb-95Feb-96Feb-97Feb-98Feb-99Feb-00Feb-01Feb-02Feb-03Feb-04Feb-05Feb-06Feb-07

Feb-08

Chart 1. The share of the unemployed that became employed, remained unemployed, or left the labor force, April 1990-May 2008, seasonally adjusted 3-month moving average

to reduced flows out of unemployment rather than increased 

flows into it. From December 

2007 to May 2008, however, 

the increased likelihood that employed individuals and new and 

returning entrants from outside 

the labor force would become 

unemployed largely contributed 

to the rise in unemployment. 

For additional information, 

contact Randy Ilg, an economist 

in the Division of Labor Force 

Statistics, Office of Employment and Unemployment Statistics. E-mail: ilg.randy@bls.gov. 

Telephone: (202)691-5456.

Information in this summary will be made available to 

sensory-impaired individuals 

upon request. Voice phone: 

(202)691-5200. Federal Relay 

Service: 1-800-877-8339. This 

report is in the public domain 

and may be reproduced without 

permission.

 

tribute to rising unemployment 

throughout most of 2007.

From December 2007 to 

May 2008, however, the rise in 

unemployment occurred largely 

because of increases in the inflows. Over that time frame, the 

share of employed persons who 

lost or left their jobs (EU) rose 

by 0.2 percentage point to 1.4 

percent. The share of individuals 

from outside the labor force that 

became unemployed (NU) also 

rose by 0.2 percentage point, to 

2.6 percent. Most of the increase 

in the NU share occurred in May, 

when there was a sharp rise in 

the number of unemployed individuals from outside the labor 

force. (See charts 2 and 3.) More 

evidence of the changes in flows 

into unemployment can be seen 

in the levels. As shown in Table 

1, flows into unemployment 

were substantially larger during the December 2007 to May 

2008 period, compared with the 

6-month period from June 2007 

to November 2007.

As throughout most of 2007, 

the share of unemployed persons who became employed 

(UE) continued to decline in 

2008, thereby contributing to 

the increase in unemployment. 

Partly mitigating this effect, 

however, was an increased likelihood that unemployed persons 

would leave the labor force (UN) 

altogether. That measure edged 

up in 2008, following a period 

of steady decline that began in 

mid-2006. (See chart 1.)

To some extent, the pattern of 

the UE outflow in the past year 

resembles that observed earlier 

in the decade. As shown in chart 

1, the share of unemployed persons that became employed (UE) 

also trended down throughout 

2000; during the 2001 economic 

downturn, the decline was much 

more pronounced.

The patterns of inflows into 

unemployment (EU and NU) 

over the past several years look 

similar to the trends from the 

mid-1990s to the onset of the 

2001 recession. That downturn 

was marked by a sharp increase 

in job loss (the EU flow) and, 

to a somewhat lesser degree, 

by an increasing likelihood that 

entrants to the labor force would 

become unemployed (NU). The 

combination of increased inflows to unemployment (EU and 

NU) and declining outflows (UE 

and UN) contributed to rising 

unemployment during the 2001 

recession. (See charts 2 and 3.) 

In summary, from May 2007 

to May 2008, the Nation’s jobless rate increased by a full 

percentage point. The labor 

force status flows show that, 

throughout most of 2007, the uptick in unemployment was due 

70

60

50

40

30

20

10

0

Became employed (UE)

Remained unemployed (UU)

Left the labor force (UN)

Percent

Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

NOTE: Shaded regions represent recessions as designated by the National Bureau of Economic Research. 

SOURCE: Bureau of Labor Statistics, Current Population Survey.
0

0.5

1

1.5

2

2.5

3

3.5

Feb-90

Feb-91

Feb-92Feb-93Feb-94

Feb-95

Feb-96Feb-97Feb-98Feb-99Feb-00Feb-01

Feb-02

Feb-03Feb-04

Feb-05

Feb-06Feb-07

Feb-08

0

1

2

3

4

5

6

Feb-90Feb-91Feb-92Feb-93Feb-94Feb-95Feb-96Feb-97Feb-98Feb-99Feb-00Feb-01

Feb-02

Feb-03Feb-04Feb-05Feb-06Feb-07Feb-08

t Chart 2. The share of the employed that became unemployed or left the labor force, April 1990-May 2008, seasonally adjusted 3-month 

moving average

3.5

3

2.5

2

1.5

1

0.5

0

Became unemployed (EU)

Left the labor force (EN)

Percent

Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

NOTE: Shaded regions represent recessions as designated by the National Bureau of Economic Research. 

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Chart 3. The share of persons not in the labor force that became employed or unemployed, April 1990-May 2008, seasonally adjusted 

3-month moving average

6

5

4

3

2

1

0

Became unemployed (NU)

Became employed (NE)

Percent

Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

NOTE: Shaded regions represent recessions as designated by the National Bureau of Economic Research. 

SOURCE: Bureau of Labor Statistics, Current Population Survey.