U-6 unemployment falls from 14.9% to 14.5% in March

I’ve already posted about the rather disappointing jobs report today, but I noted that there was a significant drop in the number of Americans working part-time for economic reasons, according to the survey of households.

Click here to see the data, or just click on the image below to enlarge the screenshot with today’s data.

That contributed to a pretty significant decline in U-6 unemployment from 14.9% in February to 14.5% in March. That’s down from 15.7% in March 2011.

I’ve argued previously that we should probably be looking more at the U-6 number than the commonly reported U-3 number (now down to 8.2%). Here’s how it’s defined: “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”

The U-6 rate is still very high by historical standards, but it has been declining consistently.

2 comments for “U-6 unemployment falls from 14.9% to 14.5% in March

  1. April 6, 2012 at 10:47 am

    I was wondering if there might be something in the way the Fed is defining those numbers that might affect things. For instance if someone takes social security are they no longer considered to be in the labor force?

    If we this year 2012 minus 62 years = 1950, which is the start of the baby boomer era. Could these declines be a function of demographics rather than economy?

    So this graph shows # of people not in labor force, and total population: http://research.stlouisfed.org/fredgraph.png?g=6f5

    There is a large recent spike in the number of people not in the labor force.

    • bill dawers
      April 6, 2012 at 5:55 pm

      This is not data generated by the Fed but by the Bureau of Labor Statistics based on surveys of households. Anyone over 16 looking for work or with work counts as being in the labor force regardless of age. Some of the decline in the labor force participation rate is a simple matter of demographics — as the population ages and we have more retirees, we’ll see a slight decline in the labor force participation rate. We’ve also seen a slight decline in the labor force participation rate because of so many discouraged workers and so many people eventually dropping out of the data because they’ve been unemployed for more than 99 weeks.

      To answer your question, it’s both.

      The good thing about the U-6 data is that it is not as distorted by other factors as the typical U-3 data and the U-6 data includes those part-time workers who would prefer full-time work.

      Check out this post for a long-term graph of the labor force participation rate: http://www.calculatedriskblog.com/2012/04/march-employment-report-120000-jobs-82.html

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