Current U-6 Unemployment Rate is 12.6% BLS and 15.1% Gallup
Current U-6 Unemployment Rate:
For July 2014 the official U-6 unemployment rate rose from 12.4% to 12.6%. But the independently produced Gallup equivalent called the “Underemployment Rate” disagrees and is at 15.1% down from 15.8% last month. So the differential between Gallup and BLS on supposedly the same data has closed a bit.
What is U-6?
U-6 is a broader measure of unemployment including discouraged workers and many consider U-6 to be”the Real Unemployment Rate” See: What is U-6 Unemployment? for the full definition of U-6 Unemployment.
As you can see from the chart below, the unadjusted U-6 unemployment rate was 15.2% in December 2011, 13.9% in November 2012 and it rose to 14.4% in December 2012. Previously, it bottomed at 14.1% in April 2012 but by July it bounced up again to 15.2% and in October the U-6 fell back to 13.9% just in time for the election. But by January 2013 it was back to 15.4%. By May it had fallen down to 13.4% but rose again in June to 14.6% before declining to 13.6% in August since then it bounced around the 13% level for a while before dropping to 11.8%.
Comparing U3 to U6
If you look at the chart below carefully you will see that the current U-3 unemployment rate is 6.5% which is significantly above the U-3 rate from 2006-2008. The current U-3 rate is almost equal to the U-6 unemployment rate during the 1999 -2001 period when U-6 bottomed at 6.3%.
You may also notice that when unemployment rises the gap between U-3 and U-6 also rises. For instance, in October 2000, unemployment was at the lowest levels on this chart with U-3 at 3.6% and U-6 was at 6.3%. For a difference of only 2.7%. But at the peak of unemployment in January 2010 U-3 was at 10.6% but U-6 shot all the way up to 18% for a difference of 7.4%. The following chart is a comparison of the Official Unemployment Rate U-3 to the broader U-6 Unemployment rate. We can see that U-6 is always higher than the often quoted U-3 “Unemployment Rate”.
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This is primarily because as times get more difficult, increasingly people give up looking for jobs. When the good times are rolling and jobs are plentiful it is easy to get a job so even the causal applicant will have a job. But this leads us back to the question… Why do we have a U-3 number at all? Aren’t all U-6 people unemployed? But during bad times like the recent few years it is scary to hear the Unemployment rate is 18% (U-6) but less scary if the number you hear is “only” 10.6% (U-3) so the government prefers the U-3 number and unfortunately the news media plays along and uses the U-3 number because it is the “Official” unemployment rate.
In the chart below we have subtracted the U3 unemployment rate from the U6 unemployment rate and so we see the differential. When the differential is low it is easier to find a job (i.e. everyone who wants one can find one).
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For More information:
How do Gallup unemployment numbers compare to Bureau of Labor Statistics numbers. See: Is the Government Fudging Unemployment Numbers?
The seasonally adjusted unemployment rate from 1948 to the present is one of the most watched statistics. Where is it now and should you trust it? See: Unemployment Rate Chart
How many jobs are there actually? This chart shows Employment since Jan 2000 and what the current trend is and may be more accurate than the unemployment numbers. Current Employment Data
Historical Employment Data Chart- How Many People Are Actually Employed? This chart shows the actual employment rate without all the mumbo-jumbo. It gives a clear picture of the employment level in the United States from 1939 to the Present. When employment is rising the economy is growing. When the employment rate levels off or declines times are not so good. Take a look and see how employment rates correspond to recessions over time.
Misery Index- Created by economist Arthur Okun to help gauge the level of misery the average person is suffering. It is a combination of the inflation rate and the unemployment rate.
What is the True Unemployment Rate? - Is the Government Fudging the numbers?
What is the Real Unemployment Rate? – Should discouraged workers be counted?
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Source: U.S. Bureau of Labor Statistics- U-6 Unemployment Rate