Count all the numbers, and the job picture looks even bleaker

Business Dan Olson · ·
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    Aug 20, 2008

Target cashier

Skeptics have long questioned the federal government's measurement of unemployment in this country.

It seems the number faithfully recited by the media each month is somehow out of synch with the reality around us, as we watch friends, neighbors and family losing jobs or being cut back in hours.

Tools for job seekers

The number reported by the media is one of six unemployment measurements reported by the federal Bureau of Labor Statistics.

It measures the number of unemployed who are actively looking for a job, a category the federal government calls U-3.

The broadest U.S. unemployment measurement is called U-6. And that measure is a much higher number, according to Steve Hine, a labor analyst with the Minnesota Department of Employment and Economic Development.

"In July, while the official unemployment rate was 5.7 percent, this U-6, this more comprehensive measure, stood at 10.3 percent," Hine said.

How can one official unemployment rate be nearly double another official unemployment rate? The difference is U-6 measures a batch of folks not counted in U-3, Hine says.

Steve Hine

U-6 counts discouraged workers -- people who have stopped looking for a job but who would take one if they could find one.

U-6 also measures people who are underemployed, "people that are working part time but would prefer to work full time," Hine explained.

People looking for jobs usually go to a Minnesota Workforce Center, which provides resources to help them in their search. Two people at a Workforce center in St. Paul, an older man and a younger woman are in the "underemployed" category.

They gave their names and where they work, but asked not to be identified publicly so they don't risk losing the part-time work they have.

The man says he was working five 10-hour days a week at a suburban Twin Cities light industrial employer, when his schedule was cut back to 10 hours a week.

Workforce center

"It affected me real hard," he said. "It was devastating because of the fact that I couldn't meet my own obligations, even though I put a great amount of time in for them."

The young woman says she's a cashier at a Roseville supermarket, and is looking for another job because she can't get enough hours at the one she has.

"It's not enough money to take care of home, and I'm currently pregnant so that's why I'm looking for a better job," she said.

Minnesota measures just one unemployment rate. It was 5.8 percent in July, slightly higher than the federal rate. Minnesota does not count people who are discouraged workers or underemployed.

Steve Hine doesn't know what a comparable rate for Minnesota would be, if the state measured those categories.

He guesses it might be lower than the federal measure of 10.3 percent in July because, according to Hine, Minnesota has a higher proportion of people in the workforce compared to the nation as a whole.

Hine isn't sure why the media consistently cite only one unemployment rate -- U-3. He guesses maybe because it's in the middle, or because the government labels it the official unemployment rate.

Hine has no quarrel with those who argue that the broader measure, U-6, is a more valid picture of what's going on in the economy.

"It's certainly a valuable measure, and perhaps one that's been overlooked in the public discussion about unemployment," he said.

The government has been calculating six unemployment rates since 1994, including the category that counts discouraged and underemployed workers.

It measures them with monthly surveys of selected households. Hine is confident the sample size yields valid results.

However, he says in all his years as a state labor analyst, he's met people who've been part of TV ratings, but never anyone who's been surveyed for the government's unemployment count.