Unemployment reached 10.2 percent in October, the Bureau of Labor Statistics (BLS) announced today, the highest rate since 1983. But the real pain of the recession lies in a less notorious number: “underemployment.”
Underemployment, what the BLS calls the “U-6 measure,” includes the jobless counted in the official unemployment rate (”U-3 measure”), plus “marginally attached workers,” those who have left the job search because they have accepted part-time work, returned to school or given up on finding a job. It is considered a better measure of employment health because it captures everyone who is working (and probably earning) less than they otherwise would or should.
The underemployment rate figure reached 17.5 percent in October, the BLS announced today. That’s 27.4 million American workers, nearly one in five, who want a job but are unable to find one because of this recession.
Underemployment may also prove a better indicator of a recovery than unemployment, if it begins to rise, according to the Wall Street Journal’s “Real Time Economics” blog.
In the coming months, the U-6 measure may be an important signal for the labor market. The official jobless rate is likely to rise through at least the first half of next year as more people return to the job market. That means Americans who now fall into the U-6 category, for stopping their job searches due to discouragement, will eventually fall into the U-3 category as they restart their job hunt.
A U-6 figure that converges toward the official rate (even an official rate that’s above 10%) could indicate improving confidence in the labor market and the overall economy. But the convergence could be months away. And when it comes, it will keep unemployment above 10% for a painfully long period.
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