GETTING TO KNOW U

We need to stop treating the official unemployment rate like it's a reliable measure of labor market distress. It's not.

All you have to do is take a few minutes to read and reflect upon how the government statisticans define it. Here's what the Bureau of Labor Statistics (BLS) says: "People are classified as unemployed if they do not have a job , have actively looked for a job in the prior four weeks, and are currently available for work." So, if you know a single mom who aint got no gig, haven't been actively looking for a job, and says that she's jammed up because of lack of child-care, tell her that she's not unemployed--and let me know how that works out for you. Or, how about your boy who, after searching for a job and coming up with nothing, just gets discouraged and drops out? Tell him that he's not unemployed and I'd be willing to bet that he'll look at you like you done lost your mind. But, according to federal statisticians, neither the single mom nor your partner is classified as "unemployed." They're considered to be "out of the labor force" and are not included in the unemployment count.

The unemployment rate is the number you a great deal about. It's simply the nunmber of unemployed persons divided by the labor force . The labor force is simply the number of unemployed plus the number of unemployed persons. Simple example: Say that there are 5 people unemployed and 95 folk employed. Well, then, the labor force is 100 (unemployed plus employed) and the unemployment rate is 5% (5/100). The February Jobs Report estimated that current unemployment rate is 6.3 and that's down from the 6.7% figure reported in December's Jobs Report. By the way, the official unemployment rate--the rate you hear a lot about-- is known as "U3". That's the "U" you're most familiar with.

But there's another "U" that you need to know about. That other "U"--called "U6"-- presents a more accurate picture of what's jumping off in the labor market.

ANOTHER "U" FOR YOU

Here's the deal with "U-6": In addition to the officially classified unemployed, U-6--unlike U-3-- also includes all "marginally attached workers," plus all persons working part-time involuntarily. "Marginally attached workers" are folk who are jobless, desire a gig, have looked for work at some during the last 12 months but not in the four weeks prior to the BLS survey. Remember that single mom who's jobless, wanting a job but not available because of lack of child care? Or, how about your partner who wants a job but gave up the search because he got discouraged about his job prospects? Well, unlike the official unemployment rate--U-3-- both of them are counted in U-6's alternative measurement of labor market distress. U-6 also does something else that U-3 does not: It counts and includes all persons who are working part-time involuntarily. You know, people working part-time only because their hours have been cut or because business conditions are so shaky they haven't been able to find full-time working. You might even know somebody like this: Somebody who's working less than 35 hour per week invountarily, and just chomping at the bit for more hours and more coins to lighten the load they're carrying.

These adjustments make huge difference. Just consider this: The last Jobs report estimates that the number of unemployed persons is 10,130,000. Now, U-6 adds to that mil 5,954,000 persons who are working part-time involuntarily. Following the U-6 count, we're up to 16,084,000 persons. And when you add 1,917,000 marginally attached workers, you're up to 18, 001,000. So when we switch from U-3 to U-6, we're not talking about 10 mil but a little more than 18 mil. And while the U-3 rate--the one you always hear about-- is currently at 6.3, the U-6 rate is a whopping 11.1. Big difference.

The graph below shows and compares the U-3 and U-6 between 2004 qnd 2020. Not surprisingly, U-6, the alternative rate, is consistently above U-3, the official rate.

No metric is perfect. But U-6 is superior to U-3 as a measure of labor market distress. It's buried within every monthly Jobs Report but is rarely cited. But if you're really conccerned about economic justice, if you're really concerned about how many are struggling in the labor market, you need to pay more attention to U-6. You need to know your U.

Catch you on the flip side,

Doc Greene