The Lesson of Real Unemployment
The problem with unemployment statistics is that you can include or exclude as many variables as you want to portray the current undercurrents of the economy however you'd like. Most optimists throw out the normal unemployment level, which as of today is over 10% for the first time since I've been alive. What I believe to be the proper, or rather more accurate portrayal of unemployment is U6 Unemployment.
Unemployment data is split up into several categories as laid out in the following manner:
- 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.
Thus the most accurate number we can use that portrays the total effect of the economy on unemployment including limited work availability, part-time jobs, discouraged workers, and a wide variety of other factors is the U6 number.
Keeping in mind the U1 number of approximately 10.1%, the current number for U6 is 17.5%. That means of the recognized "unemployed" people in America in that 10.1% number, there is an additional large population who are underemployed or have given up on finding a job.
To represent the data here is a graph of unemployment with "recessions" in grey. Note that this is somewhat old data and the far right of the graph should now be in the 10% range, approximately equal to the early 1980's recession.
Now what lesson can we take away from this? The rose glasses most Americans have on is only seeing the 10.1% number of normal unemployment. It is essential that we consider the U6 unemployment data since it is far wider in scope and aides in the understanding of true employment levels in this country.