But they can be misleading
➔ It’s the first Friday of the month and later today the Bureau of Labor Statistics (BLS) will release its employment data for April. Over the past several months the unemployment rate – most experts agree – has performed reasonably well. But has it? There may be more there than what meets the eye.
One notable anecdote was reported in The Wall Street Journal several months ago. In that story, the city fathers of mid-size, Midwest city were congratulating themselves for lowering the city’s unemployment rate from 8.5 percent to 5.5 percent. What they failed to mention was that more than 20,000 people had moved out of the city due to a lack of job opportunities – which accounted for virtually all of the decline.
BLS, however, does release several different “unemployment rates.” According to CNBC, “Economists look past the official unemployment rate… to other metrics that give their own nuanced view of jobs in the country.”
The widely reported “unemployment rate” – known within the BLS as U-3 – is defined as the "total unemployed, as a percent of the civilian labor force." It doesn’t, for example, take into account those individuals who have given up looking for work. This can be misleading at best and not a very useful gauge of the nation’s unemployment picture at worst.
On the other hand, a better gauge may be the BLS’s U-6 rate which is defined as all unemployed, plus "persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of a labor force" – or as those persons defined by CNBC as “the unemployed, the underemployed and the discouraged.”
When the media trumpets the “unemployment rate,” their reports may not qualify as the contemporary bogeyman of “fake news,” but it also may not paint a true picture of what the nation’s unemployment situation really is.