What’s The Real U.S Unemployment Rate?

The Labor Department said Friday that the U.S. unemployment rate remained at 4.9 percent in February. But does that tell the whole story?

There’s no one true unemployment rate. That 4.9 percent figure is the official rate used by the government, but the Labor Department calculates a number of figures to capture what’s going on in the labor market. On jobs day, they release a lot of data, each of which says something different about the state of jobs and wages.

Most economists looks past the official rate (also known as the “U-3”) to the U-6, which includes more unemployed workers.

While the U-3 rate is the “official” unemployment rate, it measures only those looking for a job as a percentage of the total labor force, so it leaves out large swaths of the non-working population.

The U-6 rate includes all unemployed as well as “persons marginally attached to the labor force, plus total employed part time for economic reasons,” as a percentage of the labor force. So, the unemployed, the underemployed and the discouraged. That rate remains stubbornly above prerecession levels.

The U-6 rate fell to 9.7 percent in February. Overall, the U-6 has been more volatile than the U-3. It’s down 1.3 percentage points over the past year, versus a 0.6-point drop in the U-3.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell