Larry DeBoer
Professor of
Agricultural Economics
Purdue University

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A Look Behind the Numbers of Six Unemployment Rates

Each month the Federal Bureau of Labor Statistics releases new data on the unemployment rate. January numbers were released on Feb. 3; excitement ensued. The unemployment rate dropped two-tenths of a point, to 8.3 percent. That's down from 9 percent in September. Perhaps the recovery is finally gaining momentum.

The "official" unemployment rate represents the number of people without jobs who are looking for work as a percentage of the labor force. The labor force is the total number of people who have jobs, plus the unemployed—those who are working or want to be.

Sometimes this official rate is said to underestimate the employment troubles people are having. Sometimes it's made to sound like a BLS cover-up of the economy's problems. This bugs me, because the BLS publishes several different unemployment rates that give a more detailed picture of what's going on. If you want to claim that things are worse than they seem, the BLS has a number for you.

BLS news releases are at http://www.bls.gov/bls/newsrels.htm. Scroll down to Employment Situation; this links to the latest data tables. Table A-15, Alternate Measures of Labor Underutilization, shows six unemployment rates. The first is the number of people who have been unemployed for 15 weeks or more as a percentage of the labor force. The rate was 4.9 percent in January 2012. These are folks who have been looking for work for a long time.

Household finance experts recommend you have an emergency fund equal to three to six months of household expenses. People without jobs for 15 weeks would be pretty close to depleting such a fund. They may be facing serious financial trouble.

The 4.9 percent rate represents a lot of long-term unemployment. To see this, check the list of tables again. At the bottom of the page is a link to historical data for the "A" tables. Follow the link to table A-15. On the first line, check one or both boxes on the right for seasonally adjusted or non-seasonally adjusted data, and then click "retrieve data" at the bottom. You can view data as far back as 1948.

Long-term unemployment peaked at 5.9 percent in April 2010. That was the highest number in any month since 1948. Since there was probably little long-term unemployment during World War II, it's likely that 5.9 percent has been the highest since the Great Depression.

The rate has dropped a bit, but it's still very high. And although prospects are improving, a lot of people are already in serious financial trouble.

The next unemployment rate on the list is "Job losers and persons who completed temporary jobs" as a percentage of the labor force. The rate is 4.7 percent. These are people whose jobs have disappeared. The rest of the current 8.3 percent unemployment rate represents people who left their jobs voluntarily (but the jobs didn't disappear) and people who were out of the labor force and are now re-entering. They didn't have jobs to lose.

The job-losers rate rises when the economy enters a recession and falls when a recovery gets going. This rate was 6.5 percent in October 2009, so the rate is improving. Fewer jobs are disappearing. During the economic expansion years in the early 2000s, the rate dropped as low as 2.1 percent. At 4.7 percent, the rate is not where we want it to be.

The last three rates on the BLS list are higher than the official unemployment rate. The highest rate is 15.1 percent. It includes everyone who is officially unemployed and discouraged workers who want a job but have quit looking, because they don't think they'll find one, and people who are working part time but would rather be working full time. The rate represents all the workers who would like to be working more than they are.

This rate peaked at 17.2 percent in October 2009. It was 8 percent in early 2007. Again, it's better than it was but far from where we want it to be.

The employment report for February will be released March 9. Watch the official rate to see if it comes down again. But take a look at the other measures, too. Will the long-term unemployed get some relief? Will fewer jobs disappear? Will discouraged workers and part-time workers catch a break? Those things have to happen for our recovery to really get going.



Writer: Larry DeBoer
Editor: Cindie Gosnell