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The many flavors of unemployment

How many people are unemployed? Before answering this question, you need to define unemployment. The Bureau of Labor Statistics offers six definitions, conveniently labeled U-1 through U-6, that are increasingly inclusive. What they have in common is they measure some aspect of labor underutilization. U-1 counts only those who have been unemployed for at least 15 weeks, which is usually (but not lately) a little longer than the average duration of an unemployment spell. Hence, this excludes short-term unemployment. U-2 uses a somewhat different concept: the percentage of those who are unemployed because they have lost a job or completed a temporary job. Some of them may be included in U-1. So U-2 counts workers in a precarious situation in the labor market, as they are more likely to find an unstable or unsatisfying job. U-3 is the traditionally reported unemployment rate, which counts people who are able to work, ready to work, and have looked for work in the past four weeks. U-4 takes U-3 and adds those who would like to work but have stopped looking—the so-called discouraged workers—because they believe there are no jobs for them. U-5 takes U-4 and adds those who are marginally attached to the labor market: those who, for any reason, are no longer searching for work. Finally, U-6 includes all of the above plus those who are working part-time but would prefer to work full-time.

How this graph was created: Go to the Alternative measures of labor underutilization release table (A-15) from the Bureau of Labor Statistics’ Employment Situation release. Select all (seasonally adjusted) series and click “Add to Graph.”

Suggested by Christian Zimmermann

View on FRED, series used in this post: U1RATE, U2RATE, U4RATE, U5RATE, U6RATE, UNRATE

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