Tue. Mar 9th, 2021



Broader U-6 Jobless Rate at 16.5%: May Be Headed Higher

2 min read
Wall Street Journal
The U.S. jobless rate dropped held steady at 9.5% in July, while the government’s broader measure of unemployment was also unchanged at 16.5%.
The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department, accounts for people who have stopped looking for work or who can’t find full-time jobs.
Both rates held steady despite a drop in the number of people who are employed. The number of unemployed people in the work force dropped, but that was more than offset by a decline in the overall size of the work force. Though more people were no longer in the labor force, fewer of those dropouts said they currently want a job. This helped keep the broader rate steady.
The labor force data were likely affected by a temporary end to extended unemployment benefits. The Labor Department survey was conducted before the U.S. Senate expanded an extended-jobless-benefits program through the end of the year. Beginning in August many of those people who dropped out of the labor force in the last two months may return to active job seeking. If the number of jobs created remains as muted as it has been the last few months, that could send both unemployment rates higher.
The 9.5% unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The “actively looking for work” definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things. The rate is calculated by dividing that number by the total number of people in the labor force.
The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.
Both the headline and U-6 rates are based on the number of people in the labor force. When the unemployed drop out of the labor force completely the jobless rate declines. That problem has been exacerbated in the current recession by the large number of people unemployed for a long period of time. About 6.6labor million people have been out of a job for more than 27 weeks.

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