Great Graphic: US Jobs Market in One Picture

This Great Graphic was posted byRitchie King on Quartz.  It succinctly provides the various components of the US labor market.  There is no “real” unemployment rate.  The Bureau of Labor Statistics has six different measures and they each measure a different aspect of unemployment.

U1 measures the percentage of the labor forces that is without work for 15 weeks or longer Percentage of labor force unemployed 15 weeks or longer.
U2 measures the part of the labor force that lost jobs or finished a temporary work assignment. Percentage of labor force who lost jobs or completed temporary work.
U3 is the official measure of unemployment as defined the the International Labor Organization and allows for international comparisons.  This definition includes people without jobs but have actively been looking for work over the past month.
U4 adds to U3  those that have stopped looking for work because they are discouraged in the sense that they do not believe jobs are available for them.
U5 adds to  U4 other people who would like work but have not looked for a job recently.
U6 is the broadest definition of unemployment and it adds to U5 part-time workers who would like full time work but cannot due to economic reasons.
Many critics of government policy on the political right and left want to use a broader definition than the official measure (U3).   It is quite clear by comments from both Department of Labor and Federal Reserve officials they are well aware of the dimensions of the unemployment problem not incorporated into the U3 measure.
However, rather than trying to change the official measure, critics may be better served by questioning the 6.5% U3 unemployment rate that would be one signal to begin tightening monetary policy.  This is exactly the line of argument offered by Chris Farrell in a recent Bloomberg Businessweek article. Farrell argues that the goal of policy should be a 3-4% unemployment rate, though recognizes this cannot be achieved by monetary policy alone.
This piece is cross-posted from Marc to Market with permission.

2 Responses to "Great Graphic: US Jobs Market in One Picture"

  1. benleet   May 12, 2013 at 11:29 pm

    The author may look at the USCensus data, as reported by National Jobs for All Coalition, who in their monthly report note: "In addition, millions more were working full-time, year-round, yet earned less than the official poverty level for a family of four. In 2011, the latest year available, that number was 17.9 million, 17.6 percent of full-time, full-year workers (estimated from Current Population Survey, Bur. of the Census, 9/2012)."
    This means that 101 million of the 244 million in the non-institutionalized population, 41% of all older than 15 years old, were employed full time and full year, not the author's survey's report of 47.6% or 116 million. I believe that contingent full-time but temporary workers make up the difference, 15 million. Therefore, only 34% are employed full-time and full-year at wages above poverty level, or 54% of the work force of 155 million. 46% are either unemployed, looking for full-time and full-year work, or working full-time and full-year for less than poverty level wage income. The Social Security Administration report on wages and salary income also reports that 47% of all workers, almost 72 million of 151 reporting W-2 wage earnings in 2011, earned less than $25,000 a year in wage income. The poverty level was $23,050 for 2011 for a family of four. My blog: http://benL8.blogspot.com

  2. Serge L. Wind   May 14, 2013 at 2:30 pm

    The author and interested readers may wish to view in one chart the major components of (1) the rates of unemployed (U-3) and underemployed (U-6) monthly for the period January 1994 through May 2012 (Chart 8) and (2) the number of ‘jobless’ workers in those two categories (Chart 7) in "Why is this Job Recovery Different than All Others?" by Serge L. Wind, available at http://ssrn.com/abstract=2119763 . A broader measure, the "wannabe- employed" rate, is delineated in Chart 9.