More on Unemployment Rates

Friday, March 07, 2008 | 05:00 AM

Over the past few days, we've been discussing job creation and the various ways to think about unemployment. This has been a long standing theme around here (Augmented unemployment rate, as well as the NILF issue -- Not In Labor Force).

See the list at bottom of BLS Alternative Measures of Labor Underutilization.

Since a picture is worth a 1,000 words, I'd like to point to some recent work by Prof Andrew A. Samwick of Dartmouth. Over at Vox, Baby, the good professor posted a terrific chart showing these different measures of unemployment:

U3 Unemployment Trends (%), plus U4, U5 , U6

Source: Andrew Samwick


I see two significant factors about these collectively measures of Unemployment:

First, the official (U3) measure, so favored by politicians, understates "real world" unemployment by about a third.

Second, and perhaps most important, since late 2006/early 2007, unemployment levels have bottomed and are now trending higher. And, we appear to be in the early parts of that cycle . . .



What the Unemployment Rate Misses
Andrew A. Samwick
Vox, Baby  March 05, 2008

Table A-12: Alternative measures of labor underutilization

BLS Alternative Measures of Labor Underutilization
U1     Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
U2     Job losers and persons who completed temporary jobs, as a percent of the civilian labor force
U3     Total unemployed, as a percent of the civilian labor force (the official unemployment rate)
U4     Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
U5    Total unemployed, plus discouraged workers, plus all other marginally attached workers as a percent of the civilian labor force plus all marginally attached workers
U6     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 (the "real world" unemployment rate)

Friday, March 07, 2008 | 05:00 AM | Permalink | Comments (7) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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What I find significant is that the measures all seem to track each other, trend-wise.

Posted by: Simstim | Mar 7, 2008 6:07:26 AM

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