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:
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