The June 2011 unemployment rate is set to be announced on Friday morning. For the month of May the unemployment rate was 9.1% and is part of a 3 month upward trend. This “headline” number, while perhaps the most widely circulated, does not tell the whole unemployment story in the U.S.
The 9.1% figure reported in May is a measure of the total unemployed as a percent of the civilian labor force and is labeled as “U-3” unemployment by the U.S. Bureau of Labor Statistics (BLS). Other unemployment measures include the total unemployed plus discouraged and/or other marginally attached workers, as well as those who are employed part time for economic reasons.
This additional data sheds light on the magnitude of the unemployment situation in the United States. The strictest definitions of unemployment, U-1, U-2 and U-3 all came close to exceeding or exceeded previous historical highs over the last four years (for the period 1967-2011). The more encompassing unemployment figures, U-4, U-5 and U-6 all greatly exceeded their previous highs (BLS measurement of this data began in 1994).
► U-1, persons unemployed 15 weeks or longer, as a percent of the civilian labor force
► U-2, job losers and persons who completed temporary jobs, as a percent of the civilian labor force
► U-3, total unemployed, as a percent of the civilian labor force (this is the definition used for the official unemployment rate)
► U-4, total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
► U-5, total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers
► U-6, total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
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Six Types of Unemployment Figures in the United States
During the most recent recession (December 2007 to June 2009) unemployment of all types increased. As is typical after a recession, unemployment rates continued to climb higher after the recession ended. This is due to the fact that businesses tend to continue to fire personnel at the trough of the business cycle and do not quicken the pace of hiring until demand returns and the economy starts to recover. Unemployment is therefore a lagging indicator of the health of the economy.
It was not until the end of 2010, nearly 18 months after the recession ended (June 2009) that the unemployment rates began to decrease. This lag time was approximately twice the time it usually takes for the unemployment rates to fall. The average time, post the end of a recession, it typically takes for unemployment rates to decrease is close to nine months.
Unemployment Rate by Unemployment Measure
(December 2007 – May 2011)