TRADE
TABLE OF CONTENTS
ECONOMICS GUIDE TO MICROECONOMICS
Nonfarm Payroll: What It Means, and Why It’s Important
By JAMES CHEN Updated February 08, 2023
Reviewed by CHARLES POTTERS
What Is Nonfarm Payroll?
The nonfarm payroll measures the number of workers in the U.S. except those in farming, private households, proprietors, non-profit employees, and active military.
The Bureau of Labor Statistics (BLS) surveys private and government entities throughout the U.S. to obtain information about their payrolls. The nonfarm payroll numbers are reported monthly to the public through the closely followed Employment Situation summary.
Understanding Nonfarm Payroll
According to the BLS, nonfarm employee classifications account for approximately 80% of U.S. business sectors contributing to gross domestic product (GDP).
1
Besides farm workers, other categories excluded from the nonfarm payroll numbers include:
Civilian government employees are counted except for government-appointed officials, and employees of the Central Intelligence Agency, National Security Agency, the National Imagery and Mapping Agency, and the Defense Intelligence Agency
Active military service members
Private household employees and domestic household workers
Unincorporated business owners such as sole proprietors and self-employed workers that operate without registered business incorporation
Non-profit employees
Employment Situation Summary
The Employment Situation summary is a closely followed monthly report released by the BLS on the first Friday of the month following data collection. The report is created from two comprehensive surveys: the Household Survey and the Establishment Survey.
The Household Survey reports the unemployment rate and details employment demographics. The Establishment Survey segment headlines the number of new nonfarm payroll jobs added to the national economy.
Household Survey
Key components of the Household Survey include:
The overall unemployment rate
Unemployment rates by gender
Unemployment rates by race
Unemployment rates by education
Unemployment rates by age
Reasons for unemployment
Employment data by types of alternative employment
The participation rate
