One of the running discussions I have with my friend Mark is about the unemployment numbers and why they don’t reflect what we see with other friends and co-workers. We both know of quite a few people who have stopped looking for work or who have taken part-time jobs to make ends meet. Both of these groups of people are not counted in the unemployment number, however the effect of thier actions does reflect on the actual health of the economy. This running conversation has been going on for years.
This past weekend I read an article on unemployment. The article referenced the U-6 measurement. Whoa. What’s that? So today I did some googleing to find out more on the U-6 measurement.
The US Bureau of Labor Statistics actually tracks 6 measures of unemployment. Three of those measure jumped out at me and literally made me think “Here’s the real story….”. The three measures that painted the picture are the U-1, U-3 and U-6.
The average unemployment figure (U-3) for 2011 was 8.9%. 5.3% of the umemployed people could expect to remain unemployed for 4 months or longer (U-1). And in 2011 15.9% of the US workforce was effected by unemployment is some manner (U-6). Yes. Antidotally, this is what I believe the average American is experiencing in the labor market.
What are these measures:
- U-1 -> Unemployed for 15 weeks or longer
- U-2 -> Job loser and person who completed temporary job
- U-3 -> This is the traditional unemployment figure
- U-4 -> Unemployed plus discouraged workers who are no longer lookin
- U-5 -> U-4 plus marginally attached worker
- U-6 -> U-5 plus underemployed workers
Go to the BLS web site to read the definitions yourself.
Why does the U-1, U-3 annd U-6 measures really tell the story?
U-3 is what’s reported in the news everyday. It is the baseline off of which you can ccompare the other two measurements.
There are quite a few guys I know who have been unemployed for months. Thier unemployment has run out. The U-1 measure speaks to these people who have been out for a long time.
There are also a lot of people who have taken jobs outside of thier field or are part-time. These people are technically working, but are underemployed. There are also people who have given up looking for work. In a healthy economy they would be changing jobs or at the very least actively looking for work.
The unemployment averages for 2011:
The current unemployment figures for March 2012:
It has been awhile since I could honestly say that something our government is doing has impressed me. I am impressed with the statistics the US Bureau of Labor is providing. These statistics actually parallel what myself and friends perceive to be occuring in the job market.