What’s the Real Unemployment Rate?

The U-5 measure of unemployment stands at 7.5% in October 2008.

The officially reported unemployment rate rose to 6.5% in October 2008, according to the US Bureau of Labor Statistics. The BLS actually collects 6 different measures of unemployment, however, and reports U-3, one of the middle-range measures, as the official unemployment rate. This rate includes those who are actively looking for work, but does not include those who have given up looking because they can’t find a job. The official unemployment rate also excludes those who are working part-time but can’t find a full time job.

So what are the numbers?

October 2008 Unemployment Measures

U-3, Officially Reported Unemployment: 6.5%
U-5, Unemployment Rate including those who have given up: 7.5%
U-6, Unemployment Rate including under-employed: 11.8%

Since most Americans count those who have are discouraged to look for work as unemployed, the U-5 measure is a more accurate measure of unemployment, even if it’s less politically palatable. One percent of the US work force equates to 1.5 million people. So next time you see the headlines, remember to add a percentage point (or two!) when looking at unemployment numbers.