The jobless rate numbers look encouraging when reading that people without work seeking full-time employment (the U-3 rate) — and contained in the last BLS report on unemployment before the midterm elections is 5.9%, the lowest since the Recession and getting close to roughly the 5.5% that the Federal Reserve considers consistent with the economy. The news pushed the Dow Jones average up 209 points to 17,010 on Friday.
The key here is this is one of the last reports before the midterm election.
We were told Friday by our government “U.S. employers added a robust 248,000 jobs in September and generated 69,000 more jobs in July and August than previously reported. That helped bring unemployment down from 6.1% in August. And the jobless rate now stands at the lowest level since July 2008.”
The Bureau of Labor Statistics measures employment and unemployment (of those over 16 years of age) using two different labor force surveys conducted by the United States Census Bureau (within the United States Department of Commerce) and/or the Bureau of Labor Statistics (within the United States Department of Labor) that gather employment statistics monthly.
So, what about the U-6 unemployment rate from our same BLS that counts not only people without work seeking full-time employment like the U-3 rate, but also the "marginally attached workers and those working part-time for economic reasons"? That real number is down to a mere 11.8%.
It’s important to note that some of the part-time workers BLS counted as employed by U-3 standards could be working as little as an hour a week. And the "marginally attached workers" include those who have gotten discouraged and stopped looking, but still want to work.
Unemployment Rate - U6
|2000 - 2014|
The Current Population Survey (CPS), or "Household Survey", conducts a survey based on a sample of 60,000 households. This Survey measures the unemployment rate based on the ILO definition. The data are also used to calculate 5 alternate measures of unemployment as a percentage of the labor force based on different definitions noted as U1 through U6:
- U1 : Percentage of labor force unemployed 15 weeks or longer.
- U2 : Percentage of labor force who lost jobs or completed temporary work.
- U3 : Official unemployment rate per ILO definition.
- U4 : U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
- U5 : U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently.
- U6 : U5 + Part time workers who want to work full time, but cannot due to economic reasons.
So who is counted as unemployed depends on the measurement being used.
Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:
- - An employer directly or having a job interview
- - A public or private employment agency
- - Friends or relatives
- - A school or university employment center
- - Sending out resumes or filling out applications
- - Placing or answering advertisements
- - Checking union or professional registers
- - Some other means of active job search
A better question is who is not in the labor force?
Labor force measures are based on the civilian non-institutional population 16 years old and over. Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces. The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force." Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.