Over the past few days, we’ve been discussing job creation and the various ways to think about unemployment. This has been a long standing theme around here (Augmented unemployment rate, as well as the NILF issue — Not In Labor Force).
See the list at bottom of BLS Alternative Measures of Labor Underutilization.
Since a picture is worth a 1,000 words, I’d like to point to some recent work by Prof Andrew A. Samwick of Dartmouth. Over at Vox, Baby, the good professor posted a terrific chart showing these different measures of unemployment:
Source: Andrew Samwick
I see two significant factors about these collectively measures of Unemployment:
First, the official (U3) measure, so favored by politicians, understates "real world" unemployment by about a third.
Second, and perhaps most important, since late 2006/early 2007, unemployment levels have bottomed and are now trending higher. And, we appear to be in the early parts of that cycle . . .
What the Unemployment Rate Misses
Andrew A. Samwick
Vox, Baby March 05, 2008
Table A-12: Alternative measures of labor underutilization
BLS Alternative Measures of
U1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
U2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force
U3 Total unemployed, as a percent of the civilian labor force (the official unemployment rate)
U4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
Total unemployed, plus discouraged workers, plus all other
marginally attached workers as a percent of the civilian labor force
plus all marginally attached workers
U6 Total unemployed, plus
all marginally attached workers, plus total employed part time for
economic reasons, as a percent of the civilian labor force plus all
marginally attached workers (the "real world" unemployment rate)