Saturday, September 21, 2013

What Does the U-6 "Broad Unemployment Rate" Really Tell Us?

During the recent deep recession and slow recovery, U-6, an alternative measure of unemployment issued by the Bureau of Labor Statistics, has received increased attention. People often refer to U-6, which includes several groups of workers in addition to the officially unemployed, as the “broad unemployment rate.” No doubt, part of its popularity stems from the simple fact that the broad measure of joblessness makes the employment situation look worse than the standard one, and bad news attracts readers and viewers. Beyond that, thought, just what does U-6 really add to our understanding of labor market conditions?

What U-6 tells us

The main contribution of U-6, as I see it, is to remind us that those whom the BLS defines as unemployed—those who are not working for pay even an hour a week but have looked for work within the last four weeks—are not the only ones who suffer when labor markets are weak. U-6 brings in two groups of people who feel  labor market distress even though they do not fit the official definition of unemployed:>>>Read more

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