BLS | Proposed New U7, Underemployment–Worsens in September

Payroll jobs grew by 103,000 in September, but a big portion of this is 45,000 Verizon strikers returning to work. Better news is the upward revision in payrolls for July and August of 99,000 jobs. Private payroll jobs grew by 137,000 in September, offset by a 34,000-job decline in government employment, entirely accounted for by 35,000 cuts by local-governments. What’s going to happen to government jobs when the deficit-reduction Supercommittee reports next month and recommends significant new cuts in federal spending? Remember, Congress is supposed to vote up down as with the base-closing commission.

The household survey from the BLS does not give much relief from this bleak picture. The U.S. unemployment rate (U3) was stuck again at 9.1 percent, but if we add the percentage of the labor force that is underemployed – i.e., involuntarily employed part-time – this measure of unemployment rose by 0.3 of a percentage point, i.e., from 14.8 percent to 15.1 percent. This unofficial number strikes me as useful. We could call it U7. See the last line of the table below.

The problem with the official BLS broad measures of unemployment (U4, U5, U6) shown below is that monthly changes in these numbers may be misleading because they include components that are not seasonally adjusted. The slight improvement in the rate of the marginally attached (U5), which includes discouraged (U4), could reflect seasonal factors.

The unemployment + underemployment number (what I call U7) can be compared on a monthly basis because both components are seasonally adjusted.

	Sept. 2011	Aug. 2011
Unemployment Rate % (U3)	9.1	9.1
Labor Force (mil.)	153.6	154.0
Unemployed (mil.)	14.0	14.0
Teenagers %	24.6	25.4
Blacks %	16.0	16.7
Long-term unemployed/unemployed %	44.6	42.9
Discouraged* %	0.6	0.6
Unemployed+discouraged* % (U4)	9.7	9.8
Marginally attached* %	1.7	1.7
Unemployed + marg. att.* % (U5)	10.7	10.8
Involuntary part-time %	6.0	5.7
Unemployed + marg.-att.*+invol-PT % (U6)	16.8	16.5
Unemployed + invol-PT % (proposed U7)	15.1	14.8

*Not seasonally adjusted. Marginally attached includes discouraged workers. Denominator in all cases but the LT unemployed is the labor force or (for U4, U5 and U6) a combination of the labor force and the portion of the  marginally attached in the numerator. The U4 rate changes because of rounding. The other numbers shown are seasonally adjusted by the Bureau of Labor Statistics. Source: www.bls.gov/news.release/pdf/empsit.pdf. The official broad unemployment and underemployment rates (U4, U5, U6) are discussed at http://www.bls.gov/fls/flscomparelf/unemployment.htm#table1_2.