However You Want to Measure It...

8.1% is the most recent U.S. unemployment statistic being breathlessly thrown around the news. And 8.1% is a high number. How do I know this? Because this time last year it was 4.8% and 8.1 seems a lot higher than 4.8. Even worse, as the Financial Times tells me, 8.1% is the highest the number has been since 1983.

But aside from 8.1 being a relatively high number, its hard to imagine what this kind of statistic is telling us in actual terms. The 8.1% figure is the "official" unemployment level as measured by the U.S. Bureau of Labor Statistics. The "official" level is that which measures..

Total unemployed, as a percent of the civilian labor force

Which seems like a pretty obvious way to look at things. Obviously the unemployment rate should be that percentage of all workers who are unemployed. As it stands, that's about 8 in 100.

But as Lion pointed out to me a few weeks ago, that inglorious group of sorry saps whom the U.S. Bureau of Labor Statistics sees it fit to bestow with the unhelpful title, "unemployed," is anything but obvious. In the eyes of the U.S. government, if you have lost your job and have been looking for a new one without success for over six months and have given up out of discouragement, you are not "unemployed," but are rather, appropriately enough, a "discouraged worker." "Discouraged workers,"--who really aren't workers at all...that's the point I think--unlike their more recently unemployed brethren, are no longer considered a part of the labor force proper on account of their time out of work. Therefore, discouraged though they may be, this group of people is not counted in the official statistic (called U3, if you care), but rather are lumped into the broader statistical grouping, U4.

As it stands now, U4 is at 8.5.

Overall, there are six major categories of unemployment (U1-U6) which the BLS publishes, the first narrower than the next. At the front is U1, the recently unemployed, count people who have lost their jobs in the last 15 weeks. For what its worth (and this probably isn't worth much), the ratio of recently unemployed to overall unemployed plus discouraged workers (that is, U1/U4), is currently .4, whereas this time last year, it was just a hair over .3. Which may or may not indicate that people are getting laid over at a higher rate since the newly unemployed are counting for a higher proportion of the total than last year. Or it could mean nothing since my sample size is a grand total of 2.

U6 on the other hand, being the broadest category, measures not only those who have no jobs, but also those who have been forced through economic reasons to step down to part time employment, as well as those workers considered "marginally attached"--a broader category of the above explained "discouraged worker" group. U6 isn't necessarily more helpful or more descriptive than any of the other categories, it's just broader. Not strictly limited to the unemployed, U6 might be thought of as a general measure of how many people who are either working or looking for work are feeling the pinch (excluding wage or salary cuts). U6 is the index of overall shitiness in the labor market. Right now the U.S. is standing at 14.8; this time last year, it was 9%.

And if that seems high, first, it is. But not as high in relative terms as is the official U3 statistic. U3 is higher than its been since 1983, whereas U6 levels now are comparable to 1994 levels. Unfortunately, unless my reasoning is wrong here, this may imply that there is actually less flexibility in the labor market since the current recession is translating into higher levels of strict unemployment, whereas in '94, less people were losing their jobs and more were simply taking part-time work.