What is the real unemployment rate in the US?

The unemployment rate is always a hot, debated topic. It is debated in classrooms, the Internet, and in political debates. Different people from different political parties or aspects can answer the question in the title differently, and they may be all correct. For examples, according to Factcheck (posted at Jan 12), the current unemployment rate is 5%. However, Gallup (updates daily) claimed the current real unemployment rate is actually 9.1%.

gallup

Gallup’s unemployment data by Jan 20, 2017

In fact, it is possible for both Factcheck and Gallup to be correct. The unemployment rate calculation depends on whom to include. The unemployment rate formula is unemployed worker ÷ Total workforce. It is easy to calculate the number of total workforces, but the problem is who should be included in the unemployed worker.  Hence the Bureau of Labor Statistics has six ways to calculate unemployment and they are named from U1 to U6, and they measure different aspects of unemployment:

  1. U1: Percentage of labor force unemployed 15 weeks or longer.
  2. U2: Percentage of labor force who lost jobs or completed temporary work.
  3. U3: Known as the “official unemployment rate” according to the International Labor Organization‘s definition, it represents people without jobs and they have actively looked for work within the past four weeks.
  4. U4: U3 + “discouraged workers”, as known as those who gave up looking for work because current economic conditions make them believe that no work is available for them.
  5. 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.
  6. U6: U5 + Part-time workers who want to work full-time, but cannot due to economic reasons (underemployment).

In another word, it is possible to have six correct answers. Of course, different politicians will use different numbers to optimize their political rhetoric. But it is important to learn about all six numbers in order to know more about the reality and see clearly through the politicians’ rhetoric.

Therefore, both Factcheck and Gallup are correct, they are merely talking about the different “U”. According to the Bureau of Labor Statistics, here are the numbers for all six “U”s by December 2016:

  1. U1 = 1.9%
  2. U2 = 2.3%
  3. U3 = 4.7%
  4. U4 = 5.0%
  5. U5 = 5.7%
  6. U6 = 9.2%

In conclusion, the US is having a lot of part-time workers and people writing their resumes and cover letters to their desired jobs (8.9%), while a few (0.3%) of the people gave up on finding a job. Nevertheless, all six “U”s seemed to have positive correlations toward each other.

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