 |
Alberta H. Charney, PhD
Recently, the U.S. unemployment rate increased to 8.1 percent. This represents the portion of the labor force that is looking for a job but is currently unemployed. The definition of the labor force is the sum of employed persons plus persons looking for work.
Under this definition, if a person has been laid off from a high paying manufacturing job and, to make ends meet, is working at a fast food restaurant, they are considered “employed.” If there are substantial numbers of these “underemployed” persons, then the traditional unemployment rate will significantly underestimate the level of suffering in the economy.
The traditional unemployment rate is actually one of six different unemployment rates. They are known as U1 – U6 and the traditional unemployment rate is U-3. While the traditional unemployment rate, U-3, has reached 8.1 percent, the broader definitions of unemployment are higher.
U-4, which includes discouraged workers is only slightly above U-3. There is a bigger increase of almost 2/3rds of a percent when marginally attached workers are included (U-5). But when persons working part-time who would prefer to have full-time employment are added, the unemployment rate is almost 15 percent (U-6). Since 1994, when U-4 – U-6 were added, U-6 had been approximately 3.1 – 4.5 percent higher than U-6. In the most recent month, U-6 was 6.7 percent higher than U-3.
The following are the Bureau of Labor Statistics’ definitions of the six measures of unemployment rates.
- U-1: Persons unemployed 15 weeks or longer, as a percent of the civilian labor force.
- U-2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force.
- U-3: Total unemployed, as a percent of the civilian labor force (the official unemployment rate).
- U-4: Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers.
- U-5: Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers.
- U-6: Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.
According to the Bureau of Labor Statistics, marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.
Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. They are discouraged from looking due to job-market condition.
Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
The following table contains a graph of the six unemployment rates for the U.S. Because the latest available monthly unemployment rate is for February 2009, each of the unemployment rates shown below are for February in the year indicated. 
U.S. Unemployment Rates for February of Each Year
|
|