The Labor Department has measured unemployment for decades—but in
different ways. Whether we have a Democratic or Republican president, the U-3
measure is always reported and emphasized. We call this the unemployment rate,
but it’s a misleading term. It represents the number of people who are out of
work entirely and actively seeking a job.
But the labor department measures other types of
unemployment (six ways). They measure “discouraged workers”—people who have given up
looking for a job. They’re not counted in the U-3 measure because technically
they are no longer in the labor force.
Then we have “under-employed workers.” These are people who
work part-time—some by choice, others because they cannot do better.
Steve Mnuchin—Trump’s nominee to head the Treasury Department
(and a person with serious ethical questions to answer) is applauded here for stating: “currently,
excessive influence appears to be placed by U.S. policy makers on one
metric”—this headline U-3 unemployment rate—which, he noted, “fails to include
discouraged workers or persons just marginally attached to the labor force.” He wants more focus on these truer measures of lack of employment.
The bottom line: the U-6 line for both discouraged workers
and under-employed workers was 9.4% in January 2017. The U-3 figure for
unemployment (see definition above) was 4.8%.
If policy makers and the public focus on broader measures of
unemployment, we’ll see economic and social problems more clearly. (If you want to see the six rates, click here!).
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