Unemployment/UnderEmployment (U3/U6) 1994-2012

click for ginormous chart

Source: Global Financial Data

A closer look at the Unemployment / Under-Employment belies much of the negative political narrative about the current employment situation and recovery from the financial collapse.

Underemployment began rising in late 2007; Unemployment started moving upwards in early 2008, and accelerated by late in the year. By the time President Bush left office in January 2009, employment was in free fall. When Obama was sworn in on January 20, 2012 2009, three quarters of the job losses of the Great Recession had already occurred.

I suspect this is the reason why enough people are willing to give the incumbent the benefit of the doubt when it comes to job creation. (A large majority of Voters still blame Bush for the Recession AND the weak recovery; see this and this). They were bad and getting worse when he came into office; 9 months or so later, Unemployment rates began to slowly, arduously improve.

Since late 2009, Unemployment has been gradually improving. This is what should be expected in a post-credit crisis recovery — sub par GDP, weak job creation, soft economic gains. And its why in a weak economy with relatively high unemployment, the incumbent mostly gets a pass.

Technical details about U3/U6 after the jump after

During the current Great Recession, there has been a lot of concern about how the economic downturn has affected different groups of people. In particular, there has been greater focus on the long-term unemployed, discouraged workers and part-time workers. When the Unemployment Rate (U-3) dropped from 8.1% to 7.8% in September, the broader Unemployment measure (U-6) remained unchanged. Economists and money managers are paying increased attention to these alternative measures of Unemployment. The Global Financial Database includes alternative measures of the Unemployment Rate as calculated by the Bureau of Labor Statistics. The standard unemployment rate is now known as U-3. The alternative measures now include U1 through U-6. These are:

U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force (File UNUSA1M)

U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force (File UNUSA2M)

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate) (File UNUSAM)

U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers (File UNUSA4M)

U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force (File UNUSA5M)

U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force (File UNUSA6M)

Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. Updated population controls are introduced annually with the release of January data.

Data for U-1 go back to 1948, for U-2 back to 1967, for U-3 back to 1890, and for U-4, U-5 and U-6 back to 1994.

Source: Global Financial Data

Thanks, Ralph !
Ralph Dillon rdillon@globalfinancialdata.com