The Campaign Spot

What Our Unemployment Rate Measures . . . and What It Doesn’t

With such widespread surprise and skepticism about this morning’s report on unemployment from the Bureau of Labor Statistics, we should unpack a bit about it.

Jim Pethokoukis has been the go-to guy on this stuff even before he started at AEI, and he explains how much of this month’s growth is driven by “a flood of 582,000 part-time jobs.” The number of workers in part-time jobs who want full-time work actually increased by 600,000 last month.

It’s worth noting that one big reason that you hear so much grumbling and skepticism about the official unemployment rate (the U-3) is the difference between what it measures and what Americans see around them — perhaps best measured by the U-6, which includes “marginally attached,” “discouraged workers” and those working part-time who want, and can’t find, full-time work.

And as I wrote yesterday, there’s an argument for a U-7 number, one that includes the long-term unemployed, who haven’t looked for a job in a year but who say they want to work.

And few Americans know about the “discouraged worker” factor in the statistics — the factor of the unemployed worker who was looking for work sometime in the past year but has stopped looking for work. The most recent jobs report indicated that there are 844,000 discouraged workers who aren’t counted in the official unemployment rate.The official rate is known as the U-3 figure; adding “marginally attached” workers and then adding “discouraged workers” gives us the U-4 and U-5 figures, respectively. Then there is the question of how to classify those who are working part-time but who want, and cannot find, full-time work. Technically these workers are employed, but they are likely to be struggling financially; there are 8 million Americans in this category; adding these to U-5 brings us to the U-6 figure. Finally, Paul Solman, the business and economics editor for PBS’s NewsHour, believes that the long-term unemployed — those who have stopped looking for a year or more, but say they want a job, a figure reaching about 7 million — should be included, in a figure he labels U-7.

If you include these groups, the number of “unemployed” booms from 12.5 million to 27 million.

By the way, the number of Americans who haven’t looked for work in a year but who still want jobs declined slightly in this morning’s report, from 6,957,000 to 6,727,000.


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