Blog Post

By: Juliette Tennert, MS

As we celebrate Labor Day, I thought I would shed a little light on one of the most-cited labor statistics – the unemployment rate.

If you enjoy teasing economists, you’re probably familiar with the joke that if you ask three economists a question, you will get five different answers. We can’t help ourselves – we work in a world of copious data that is full of nuance!

Ask a labor economist about the latest unemployment rate and you could get six different answers. In addition to the commonly-reported “headline unemployment rate,” the Bureau of Labor Statistics (BLS) publishes five additional measures of labor underutilization for all 50 states on a quarterly basis.

The U-1 rate includes people unemployed 15 weeks or longer and actively seeking employment, as a percent of the civilian labor force (all people ages 16 and over who are either employed or unemployed and actively seeking work).

The U-2 rate includes unemployed people who lost their job or completed a temporary job in the last 12 months and are actively looking for work, as a percent of the civilian labor force.

The U-3, or “headline unemployment,” rate includes all unemployed people who are actively seeking work (including those in the U-1 and U-2 categories), as a percent of the civilian labor force.

The U-4 rate is the sum of the U-3 rate and people who have looked for work sometime in the past 12 months but are no longer looking because they believe there are no jobs available for them (discouraged workers), as a percent of the civilian labor force.

The U-5 rate is the sum of the U-4 rate and all other people who would like to work, have looked for a job sometime in the past 12 months, and are no longer (marginally attached workers, discouraged workers are a subset of the marginally attached), as a percent of the civilian labor force.

The U-6 rate is the sum of the U-5 rate and people who would like to work full time, but are working part time for economic reasons, as a percent of the civilian labor force. The U-6 rate is sometimes referred to as the “real unemployment rate” because it accounts for underemployed workers in addition to the unemployed.

The chart below shows all 6 measures of labor underutilization for Utah. The BLS publishes a 4-quarter moving average to account for seasonality. The U-6 rate topped out at around 15 percent in 2010, when the U-3 rate was around 8 percent. As discouraged workers have re-entered the labor force, and more people are finding full-time work, the U-6 rate currently measures around 8 percent and the U-3 rate has dropped to around 3.5 percent. Nationally, the U-6 rate is over 11 percent and the U-3 rate is over 5.5 percent.

The next time you have the pleasure of interacting with an economist, I hope you’ll dazzle them with your knowledge of all of the different measures of unemployment!

Juliette Tennert is the director of economic and public policy research at The Kem C. Gardner Policy Institute.